Binance Unit Fined $6.9 Million for Crypto Product Misclassification

The Australian federal court has imposed penalties on Binance's local unit for misclassifying over 85% of its Australian clients, exposing them to high-risk crypto products without required protections.

According to the ASIC, between July 2022 and April 2023, Binance Australia improperly classified 524 retail investors as wholesale clients, granting them access to 'high-risk' cryptocurrency derivatives without required consumer protections.

The misclassified client group incurred A$8.7 million in trading losses and paid A$3.9 million in fees. Binance 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.