The Federal Court of Australia has imposed an AU$10 million fine on Binance Australia Derivatives after the company admitted to misclassifying more than 85% of its local clients. Those wrongly labelled customers went on to rack up AU$8.66 million in trading losses while paying AU$3.89 million in fees.
Singapore Summit: Meet the largest APAC brokers you know (and those you still don’t!)
The 2023 Regulatory Reckoning
The trouble began in early 2023, when the Australian Securities and Investments Commission (ASIC) launched a targeted review of Binance’s local operations – the exchange offered to Australian users leveraged crypto derivative products.
These products have become particularly popular, allowing traders to speculate on the price movements of a digital asset without actually owning it.
According to CoinGecko, the ten largest crypto perpetual exchanges processed a staggering US$92.9 trillion in trading volume in 2025, up 64.6% on the previous year
Nonetheless, ASIC alleged that between July 2022 and April 2023, the exchange had misclassified more than 500 retail clients as wholesale investors, stripping away key consumer protections.
Sarah Court, then ASIC’s deputy chair, described Binance’s compliance systems as “woefully inadequate”, noting that clients had suffered avoidable losses as a result.
The regulator further accused the company of failing to provide services “efficiently, honestly and fairly.”
Faced with mounting scrutiny, Binance opted for retreat, requesting the cancellation of its Australian Financial Services licence later that year.
It was a swift exit, though not a clean one.
How Not to Classify Clients
According to ASIC, Binance admitted to exposing 524 retail investors to high-risk crypto derivatives without appropriate safeguards, owing to their erroneous categorisation as wholesale clients.
Prospective “sophisticated investors” were reportedly allowed unlimited attempts at a multiple-choice quiz until they passed.
Senior compliance staff had also been found to provide scant review of applications or supporting documents. In one instance, a client was deemed a professional investor simply by self-certifying as an “exempt public authority.”
ASIC vs Crypto
ASIC’s pursuit of Binance is part of a wider campaign. The regulator has increasingly argued that many crypto products are, in substance, conventional financial instruments dressed in tech jargon, and should be regulated accordingly.
Others have already felt the sting. Bit Trade, the Australian operator of Kraken, was fined AU$8 million in December 2024 over a leveraged “margin extension” product.
Europe, too, is stirring. The European Securities and Markets Authority (ESMA) has warned that crypto perpetuals could be treated as CFDs, bringing them under familiar – and stricter – rules.
Meanwhile, on the other side of the Atlantic, the Commodity Futures Trading Commission is preparing to open the door to crypto perps. For years, American traders have been largely confined to spot markets and more traditional instruments.
The direction of travel for crypto derivatives, then, appears increasingly clear.
The Federal Court of Australia has imposed an AU$10 million fine on Binance Australia Derivatives after the company admitted to misclassifying more than 85% of its local clients. Those wrongly labelled customers went on to rack up AU$8.66 million in trading losses while paying AU$3.89 million in fees.
Singapore Summit: Meet the largest APAC brokers you know (and those you still don’t!)
The 2023 Regulatory Reckoning
The trouble began in early 2023, when the Australian Securities and Investments Commission (ASIC) launched a targeted review of Binance’s local operations – the exchange offered to Australian users leveraged crypto derivative products.
These products have become particularly popular, allowing traders to speculate on the price movements of a digital asset without actually owning it.
According to CoinGecko, the ten largest crypto perpetual exchanges processed a staggering US$92.9 trillion in trading volume in 2025, up 64.6% on the previous year
Nonetheless, ASIC alleged that between July 2022 and April 2023, the exchange had misclassified more than 500 retail clients as wholesale investors, stripping away key consumer protections.
Sarah Court, then ASIC’s deputy chair, described Binance’s compliance systems as “woefully inadequate”, noting that clients had suffered avoidable losses as a result.
The regulator further accused the company of failing to provide services “efficiently, honestly and fairly.”
Faced with mounting scrutiny, Binance opted for retreat, requesting the cancellation of its Australian Financial Services licence later that year.
It was a swift exit, though not a clean one.
How Not to Classify Clients
According to ASIC, Binance admitted to exposing 524 retail investors to high-risk crypto derivatives without appropriate safeguards, owing to their erroneous categorisation as wholesale clients.
Prospective “sophisticated investors” were reportedly allowed unlimited attempts at a multiple-choice quiz until they passed.
Senior compliance staff had also been found to provide scant review of applications or supporting documents. In one instance, a client was deemed a professional investor simply by self-certifying as an “exempt public authority.”
ASIC vs Crypto
ASIC’s pursuit of Binance is part of a wider campaign. The regulator has increasingly argued that many crypto products are, in substance, conventional financial instruments dressed in tech jargon, and should be regulated accordingly.
Others have already felt the sting. Bit Trade, the Australian operator of Kraken, was fined AU$8 million in December 2024 over a leveraged “margin extension” product.
Europe, too, is stirring. The European Securities and Markets Authority (ESMA) has warned that crypto perpetuals could be treated as CFDs, bringing them under familiar – and stricter – rules.
Meanwhile, on the other side of the Atlantic, the Commodity Futures Trading Commission is preparing to open the door to crypto perps. For years, American traders have been largely confined to spot markets and more traditional instruments.
The direction of travel for crypto derivatives, then, appears increasingly clear.
