Binance Australia has been accused of breaching consumer protection
The Australian Securities and Investments Commission (ASIC) has launched legal action against crypto derivatives trading platform Binance Australia Derivatives, citing customer protection failures.
In a Dec. 18 news release, the regulator said Binance had classified more than 500 retail clients as wholesale investors between July 2022 and April 2023, stripping it of legal protections provided by Australian financial laws.
RELATED: Binance Accused of IP Theft by Owner of PNUT Token
Consumer Protection Lawsuits
In the application, ASIC said retail customers are entitled to robust consumer protections, including a Product Disclosure Statement (PDS), Target Market Determination (TMD) and internal dispute resolution procedures.
ASIC Deputy Chair Sarah Court has criticized Binance's compliance systems, describing them as “woefully inadequate” and saying many customers have suffered significant financial losses due to inadequate protection.
Related: Australia fines Kraken operator $5M for regulatory violations
Suspected regulatory violations
The lawsuit lists several regulatory violations, including Binance's failure to issue a PDS or TMD, inadequate dispute resolution mechanisms, and a lack of employee training to ensure compliance with its financial services license. ASIC also accused Binance of failing to provide services “competently, honestly and fairly”.
In the year After reviewing the crypto exchange's operations in April 2023, ASIC revoked Binance's Australian financial services license “based on a request for delisting from a legal entity”.
RELATED: Coinbase accused of market manipulation, Kraken Australia hit with $5M fine: Law ruled
ASIC to order crypto licensing
The case reflects ASIC's growing focus on the crypto industry. Recently, the regulator fined Kraken's Australian operator $12.8 million for regulatory violations. ASIC is developing new guidelines that will require crypto exchanges to obtain financial services licenses under the Corporations Act.
In September, ASIC Commissioner Alan Kirkland said that the regulator was preparing new guidelines that would require crypto exchanges to obtain a financial services license.
The licensing requirements are set to be extended beyond those associated with digital currency exchanges, according to The Australian Financial Review (AFR).
Kirkland revealed the authority's plans at the AFR Crypto and Digital Assets meeting in Sydney on September 23, and said the regulator would consider the corporation's legislation covering major crypto assets such as Bitcoin (BTC) and Ether (ETH).
Meanwhile, Binance faces allegations of intellectual property theft in the United States.
Mark Longo, the owner of Peanut the Squirrel, has issued a cease and desist letter to Binance, alleging trademark infringement related to the PNUT-themed memecoin.
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