Australia’s Federal Court has ordered Oztures Trading Pty Ltd, operating under the name Binance Australia Derivatives, to pay a penalty of AUD $10 million, equivalent to approximately $6.9 million USD. The ruling follows the exchange’s admission that it improperly exposed 524 retail investors to high-risk cryptocurrency derivative products without the consumer protections those clients were legally entitled to receive. The court also directed Binance to contribute toward the legal costs of the Australian Securities and Investments Commission.
The violations took place between July 2022 and April 2023, during which Binance’s client onboarding process contained significant compliance failures. According to ASIC, retail clients were permitted to retake a multiple-choice quiz an unlimited number of times until they achieved a passing score, allowing them to be incorrectly designated as sophisticated investors. This flawed process formed the basis of the misclassification affecting hundreds of applicants.
Of the 524 clients who were wrongly categorised, 460 were incorrectly assessed as meeting the Sophisticated Investor Test, while 33 were misclassified under the Individual Wealth Test. A further 26 were labelled professional investors, four were recorded as Related Body Corporate, and one was assessed as meeting the Large Business Test. In at least one documented case, Binance classified an individual as a professional investor based solely on that person’s self-reported claim to be an exempt public authority, with no adequate verification conducted.
The financial impact on the misclassified clients was substantial. The group collectively incurred AUD $8.66 million in trading losses, equivalent to roughly $6 million USD, and paid AUD $3.89 million in fees, approximately $2.67 million USD. These figures underscore the scale of harm resulting from the compliance shortcomings identified by the regulator.
ASIC Chair Joe Longo issued a pointed statement criticising the exchange’s conduct. He said Binance failed to establish basic compliance checks and incorrectly approved hundreds of applications for complex, wholesale investor products. Longo added that the failures left more than 85 percent of Binance’s Australian customer base exposed to high-risk products they should never have been able to access, stripping them of important consumer protections and costing retail investors millions of dollars.
The AUD $10 million penalty is separate from approximately AUD $13.1 million in compensation that Binance had already paid to affected clients in 2023. Justice Moshinsky presided over the matter and issued the cost contribution order alongside the financial penalty. Decrypt contacted Binance for comment on the ruling but had not received a response at the time of publication.
Originally reported by Decrypt.
