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Watchdog Bites Back: Binance Faces A$10 Million Fine in Australia

Australia's financial regulator has levied a substantial A$10 million ($6.8 million) penalty against Binance's local derivatives arm due to significant onboarding failures.

The Australian Securities and Investments Commission (ASIC) disclosed that the Federal Court found Oztures Trading Pty Ltd, trading as Binance Australia Derivatives, guilty of misconduct.

From July 2022 to April 2023, Binance misclassified over 85% of its Australian clients as wholesale or professional investors.

This misclassification allowed 524 retail clients to access high-risk crypto derivative products without essential consumer protections, leading to nearly A$12 million ($8.2 million) in losses.

ASIC's review uncovered various compliance deficiencies, including a failure to provide necessary Product Disclosure Statements and internal dispute resolution systems.

Binance acknowledged its shortcomings, admitting insufficient training and oversight of its onboarding staff.

Further exacerbating the situation, clients could retake assessments for wholesale investor status, allowing manipulation of eligibility criteria.

As a direct result of these misclassifications, affected clients suffered A$8.66 million ($5.9 million) in losses and paid A$3.8 million ($2.6 million) in fees.

ASIC emphasized that these breaches go beyond technical errors, highlighting the need for comprehensive compliance measures.

In a coinciding market reaction, Binance Coin (BNB) dropped by 3% to $608 amidst a broader crypto market correction.