Watchdog Slaps Binance Australia With A$10 Million Fine Over Onboarding Failures

Australia’s financial regulator has hit Binance’s Australian derivatives arm with a A$10 million ($6.8 million) penalty after finding onboarding failures that exposed retail customers to risky products and resulted in millions in losses.

According to a Statement of Agreed Facts filed with the court, Binance misclassified more than 85% of its Australian client base as wholesale or professional investors between July 2022 and April 2023. 

ASIC’s review found a series of basic compliance shortcomings. Binance admitted it failed to provide retail clients with a Product Disclosure Statement, did not prepare a Target Market Determination, lacked a compliant internal dispute resolution system, and did not ensure that financial services were provided efficiently, and fairly. 

Another troubling element highlighted was how Binance assessed customers’ eligibility for wholesale investor status. It is alleged that the exchange allowed prospective sophisticated investors to retake a multiple‑choice assessment repeatedly until they obtained a passing score, enabling applicants to game the process. 

Those classification failures had tangible financial consequences. The misclassified group collectively incurred A$8.66 million ($5.9 million) in trading losses and paid A$3.8 million ($2.6 million) in fees. 

In 2023, ASIC oversaw approximately A$13.1 million ($9 million) in compensation paid to affected clients; the new court-ordered penalty is in addition to that compensation. Justice Moshinsky also ordered Binance to contribute to ASIC’s legal costs.

ASIC Chair Joe Longo described the breaches as more than mere technicalities. “Binance failed to set up basic compliance checks and incorrectly approved hundreds of applications for complex, wholesale investor products,” he said. 

In tandem with the exchange’s fine, Binance Coin (BNB) — its native token — saw its price drop by 3% to $608 on Friday, amid a broader market correction. 

Featured image from OpenArt, chart from TradingView.com