Australia: Announced ASIC lawsuit against Binance Australia Derivatives over alleged consumer protection failures

On 18 December 2024, the Australian Securities and Investments Commission (ASIC) announced a public lawsuit against Oztures Trading Pty Ltd, trading as Binance Australia Derivatives. The lawsuit alleges that from 7 July 2022 to 21 April 2023, Binance misclassified 505 retail clients as wholesale clients, depriving them of consumer protections under Australian financial services laws. This misclassification, representing 83% of its Australian client base, allegedly resulted in the failure to provide protections under Australian financial services laws, including the provision of a Product Disclosure Statement (PDS), access to a compliant dispute resolution scheme, and a Target Market Determination (TMD) under design and distribution obligations. ASIC alleges that Binance failed to provide a PDS to retail clients, did not make a TMD, lacked a compliant internal dispute resolution system, and did not ensure its financial services were provided efficiently, honestly, and fairly. Additionally, Binance did not comply with the conditions of its Australian Financial Services (AFS) license and did not ensure its employees were adequately trained and competent. This exposed clients to high-risk, speculative products without appropriate protections, leading to clients suffering significant financial losses due to the lack of consumer protections, with ASIC overseeing compensation payments of approximately AUD 13 million to affected clients in 2023. ASIC seeks penalties, declarations, and adverse publicity orders against Binance.