An Australian court has imposed a fine on Binance’s derivatives arm in Australia with a $6.9 million fine (AUD$10 million), as per an official press release by ASIC on Friday. The Australian Securities and Investments Commission.
“This is a clear warning to global financial services entities looking to set up shop in Australia,” said ASIC chair Joe Longo. “All financial services companies must follow the law from day one, and have proper client onboarding systems and processes in place. This includes financial services that relate to crypto and digital assets,”
The fine comes due to a mistake on Binance Australia Derivatives part, which the company admits, saying in a statement that it failed to properly classify 524 clients, which left them without proper consumer protections for nearly a year. From July 2022 to April 2023, these clients were misclassified as wholesale clients.
Because of the error, these customers were exposed to high-risk cryptocurrency products, posting losses of AUD$8.66 million and paying AUD$3.89 million in fees.
Alongside the mishap of wrong classification, Binance also admitted to weak compliance systems, which meant that when clients were onboarded, documentation was never properly verified, despite having senior compliance teams in place.
This is not the first time Binance has faced fines, having to pay penalties previously in the Netherlands, India, Canada, and the United States.
Of these, the largest and most notable fine was the one imposed by the United States, a total of $4.3 billion, along with a personal fine of $50 million that former Binance CEO Changpeng Zhao had to pay.
The massive penalties were split between the FinCEN and OFAC and were issued because of a breach of international financial sanctions and failure to prevent money laundering.
Binance was created in 2017 and still remains the largest cryptocurrency exchange in the world.