On 18 December 2024, the Australian Securities and Investments Commission (ASIC) commenced civil proceedings in the Australian Federal Court against Oztures Trading Pty Ltd, trading as Binance Australia Derivatives, alleging significant breaches of consumer protection laws under the Australian Corporations Act 2001 (Cth). ASIC claims Binance misclassified 505 retail clients as wholesale clients, denying them crucial consumer protections while exposing them to high-risk crypto derivative products. According to ASIC’s Statement of Claim and Originating Process filed in the Federal Court, Binance’s compliance systems failed to meet legal standards, leading to systemic misclassifications, inadequate disclosures, and substantial financial harm to clientsThe case was filed in the Australian Federal Court’s Victoria Registry under File Number VID1381/2024. While ASIC has initiated proceedings seeking civil penalties, declarations, and adverse publicity orders against Binance Australia Derivatives, the hearing date has not yet been scheduled.
Binance Australia Derivatives operated under an AFS licence until April 2023, when ASIC cancelled the licence at Binance’s request following a targeted regulatory review. The entity is part of the global Binance Group, one of the world’s largest cryptocurrency exchanges by trading volume, with operations spanning multiple jurisdictions.
ASIC alleges that between 7 July 2022 and 21 April 2023, Binance Australia Derivatives misclassified hundreds of Australian retail clients—representing 83% of its client base—as wholesale investors. This misclassification resulted in retail clients being excluded from key safeguards, including access to a Product Disclosure Statement (PDS), a Target Market Determination (TMD), and a compliant internal dispute resolution system.
ASIC alleges that Binance’s internal compliance measures were fundamentally flawed, leaving clients exposed to complex and speculative crypto derivative products without proper disclosures. During this period, Binance’s systems approved wholesale classifications in under five to ten minutes in some cases, raising concerns over inadequate due diligence.
ASIC’s investigation found that Binance’s failures caused significant financial harm to its Australian clients. In 2023, Binance paid approximately AUD 13.1 million in compensation to affected clients for aggregate losses incurred due to misclassification. ASIC’s action aims to impose further accountability on Binance for failing to comply with its legal obligations and protect retail investors.
ASIC’s case centres on breaches of multiple provisions of the Australian Corporations Act 2001 (Cth), including, Section 1012B(3) which deals with failure to provide a Product Disclosure Statement to retail clients, Section 994B(1) which deals with failure to prepare and issue a Target Market Determination for the products offered, Section 912A(1)(a), which deals with failure to provide financial services efficiently, honestly, and fairly. Section 912A(1)(b), failure to maintain adequate compliance systems as required under its Australian Financial Services (AFS) licence, Section 912A(1)(f), which deals with failure to ensure employees were adequately trained and competent, Section 912A(1)(g), which deals with failure to implement a compliant internal dispute resolution system. These provisions are designed to ensure that AFS licence holders meet strict legal standards when providing financial services to retail clients, including protecting investors from undue risk and misconduct.
ASIC’s action against Binance Australia comes amid broader regulatory scrutiny of the digital asset sector. In parallel, ASIC recently released Consultation Paper 381 to clarify how existing financial product definitions apply to cryptoassets and related services under Australian law.
The case is now before the Australian Federal Court, with further directions and a hearing date expected to be set in early 2025. ASIC will pursue penalties, declarations of legal breaches, and adverse publicity orders to hold Binance accountable under Australian financial law.
