The Australian Securities and Investment Commission (ASIC) has filed a lawsuit against Oztures Trading Ltd—the operator of Binance Australia Derivatives—over inadequate customer protection practices.
In a statement dated Dec. 18, the regulator claimed that more than 500 retail investors had been misclassified wholesale clients and were denied crucial consumer protections.
ASIC’s allegations
ASIC claimed that Binance, between July 2022 to April 2023 offered crypto derivatives products to 505 Australian investors representing 83% local clients, but misclassified them as wholesale customers.
This classification circumvented mandatory financial law protections in Australia, including access to disclosure documents and dispute resolution mechanism.
Binance has been accused of not releasing a product disclosure, failing determine the target market for their products and providing a poor internal dispute resolution system.
ASIC Deputy Chair Sarah Court emphasized that Binance’s actions likely caused significant financial harm to its clients. Binance has previously compensated some users with $13 Million in compensation.
The Court said that a proper classification for retail clients was essential in order to receive all the needed information so they can make educated decisions on a high-risk market. She said:
“Many digital assets and related products are financial products under the current law. We are consulting with the sector to improve regulatory clarity, and ASIC will continue to use the full range of regulatory and enforcement tools to safeguard consumers and uphold market integrity in the digital asset sector.”
ASIC announced that it will seek sanctions, declarations and adverse publicity orders.
This lawsuit marks ASIC’s latest move to enforce compliance among crypto exchanges. ASIC won an important legal case last week that saw Bit Trade Australia (the operator behind Kraken Australia) fined $5 million by the regulator for regulatory infractions involving a fraudulent credit facility.
ASIC’s actions highlight its commitment to holding exchanges accountable to Australian financial laws.
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