March 27 (Reuters) – An Australian federal court has fined Binance’s local derivatives unit A$10 million ($6.9 million) after it misclassified more than 85% of its Australian clients, exposing them to high-risk crypto products, the country’s securities regulator said on Friday.
The penalty stems from a lawsuit filed by the Australian Securities and Investments Commission (ASIC) in late 2024, which alleged that the misclassification allowed retail investors to access risky crypto derivatives without the necessary safeguards.
Binance Australia Derivatives, part of the world’s largest crypto exchange by trading volume, acknowledged the failures in an agreed statement of facts with ASIC. The court found that between July 2022 and April 2023, the firm wrongly categorized 524 retail investors as wholesale clients, giving them access to high-risk crypto derivatives without appropriate protections.
As a result, these clients incurred A$8.7 million in trading losses and paid A$3.9 million in fees. The company admitted to significant shortcomings in its client onboarding processes and staff training, which allowed users to repeatedly retake a multiple-choice test until they qualified as sophisticated investors.
In one instance, a client was incorrectly classified as a professional investor based solely on self-certification as an “exempt public authority,” without proper verification. ASIC noted that the fine comes in addition to roughly A$13.1 million in compensation already paid by Binance Australia to affected clients in 2023. In response, Binance Australia said the issue had been self-identified, reported to ASIC, and fully resolved in 2023.
