ASIC Reviews Binance Australian’s Derivatives Business Over Account Closure

The Australian Securities and Investments Commission (ASIC) is currently reviewing Binance Derivatives in Australia, according to a spokesperson from ASIC. The review is aimed at the company’s classification of retail and wholesale clients.

This development comes after Binance closed the derivatives position of 500 users who were incorrectly classified as wholesale investors. Retail clients are not permitted to trade futures or derivatives under Australian regulation.

A few hours after the event, Binance said they had contacted affected users and would compensate them for losses incurred. The crypto exchange also stated that it would continue to obey local laws and regulations and stay in contact with the affected users. However, according to Bloomberg, Binance is yet to report the matter to the Australian Regulator, as required by its Australian financial services license.

Changpeng Zhao, CEO of Binance, has addressed the issue on Twitter, stating that users affected by the incident would be compensated for any losses incurred. He also assured consumers that the situation would be reviewed and that future trading could be re-opened in the country. Zhao emphasized that the protection of users is Binance’s top priority.

In 2019, ASIC proposed a paper to ban binary options and derivatives products such as CFDs for retail clients due to their financial risks and potential for losses. A review conducted by the Commission in 2017 revealed that 80% of people who traded binary options lost money, while 72% of CFD traders also lost money. This data led to the ban of retail trading to safeguard consumers from financial ruin.

Last year, the Australian Regulator extended the ban until October 1, 2031. Karen Chester, the Deputy Chair of ASIC, commented on the extension, saying;

“Binary options are harmful, high-risk financial products resulting in millions of dollars in losses for retail investors before our ban. Extending our binary options ban until 2031 ensures this important protection for retail investors will continue.”