Binance Unit Fined A$10 Million for Client Classification Failures

The Australian Federal Court has handed down a significant penalty against Binance's local unit for failing to properly classify its clients.

Between July 2022 and April 2023, the company misclassified 524 retail investors as wholesale clients, granting them access to high-risk cryptocurrency derivatives without required consumer protections. This led to these investors incurring A$8.7 million in trading losses and paying A$3.9 million in fees.

Binance Australia acknowledged serious lapses in client onboarding and staff training that allowed users to repeatedly attempt a multiple-choice test until they achieved a score qualifying as sophisticated investors. In one case, a client was incorrectly deemed a professional investor based solely on a self-certification as an exempt public authority without proper verification.