The Federal Court of  Australia has fined Binance’s local derivatives arm 10 million Australian dollars ($6.9 million) after the company admitted to widespread client onboarding failures that exposed retail investors to high-risk crypto products without proper protections.

The Federal Court found that Australian Securities and Investments Commission (ASIC) identified that more than 85% of Binance Australia’s client base had been misclassified.

Out of the 524 users,

  • 460 retail investors incorrectly classified as meeting the Sophisticated Investor Test

  • 33 were incorrently classfied as meeting the Individual Wealth Test

  • 26 did not provide sufficient evidence that they met and were incorrectly classified as meeting with the Large Business Test

between July 2022 and April 2023.

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As a result, those clients were able to access complex cryptocurrency derivatives without the consumer safeguards required under Australian law, later incurring millions in trading losses and fees.

Binance admitted to multiple compliance failures in a statement of agreed facts, including

  • inadequate onboarding procedures,

  • poor staff training, and

  • weak internal oversight.

The company also allowed users to repeatedly attempt a multiple-choice test until they qualified as “sophisticated investors,” and in some cases relied on self-certification without proper verification.

Regulators said the exchange failed to meet key obligations such as

  • providing product disclosure statements,

  • complying with Australia Financial Services license conditions,

  • Inadequtely training employees,

  • making target market determinations, and

  • maintaining a compliant dispute resolution system.

The penalty comes in addition to roughly 13.1 million Australian dollars ($9 million) already paid in compensation to affected users in 2023.

The Binance Australia Derivatives license was later cancelled by the securities regulator in early 2023 after a targeted review of Binance’s operations in the country.

ASIC described the case as a warning to global financial services firms operating in Australia emphasizing that proper client classification and onboarding processes are critical when offering high-risk financial products.

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