Binance Australia Derivatives’ AFS Licence Revoked
ASIC, the Australian Securities and Investments Commission, has cancelled the Australian financial services licence of Oztures Trading Pty Ltd, which operates as Binance Australia Derivatives (Binance). Binance had requested the cancellation, which will take effect immediately, after ASIC had issued a notice of hearing to consider the suspension or cancellation of its licence. The cancellation means that Binance will not be able to increase derivatives positions or open new positions for clients after 14 April 2023. Clients will be required to close any existing positions by 21 April 2023, and Binance will close any remaining open positions on the same day.
Australia Securities & Investment Commission has today cancelled the Australian financial services licence held by Oztures Trading Pty Ltd trading as Binance Australia Derivatives. Binance will require clients to close any existing derivative positions before 21 April 202.…
— Wu Blockchain (@WuBlockchain) April 6, 2023
Ongoing Review of Binance Australia
ASIC has been conducting a targeted review of Binance’s financial services business in Australia, including its classification of retail and wholesale clients. ASIC Chair Joe Longo emphasized the importance of AFS licensees correctly classifying clients, particularly retail clients who are entitled to important consumer protections under financial services laws in Australia, including external dispute resolution through the Australian Financial Complaints Authority. The review is ongoing and focusing on the extent of consumer harms.
Crypto, and crypto derivatives in particular, pose additional risks to consumers due to the operation of leverage, and many crypto products and services are not regulated by ASIC. ASIC has repeatedly warned potential crypto users of the risks involved and supports a regulatory framework for crypto that prioritizes consumer protection and market integrity. The final decision on regulatory settings is up to the government.
ASIC Regulatory Action
Binance is not the only crypto-related entity to have faced regulatory action by ASIC recently. In December 2022, ASIC commenced civil penalty proceedings against Finder Wallet Pty Ltd for alleged unlicensed conduct and inadequate risk disclosure in relation to the Finder Earn product. In November 2022, ASIC commenced civil penalty proceedings against Block Earner for unlicensed conduct in relation to its crypto-asset based products, and in October 2022, ASIC commenced civil penalty proceedings against BPS Financial for alleged misleading statements and unlicensed conduct in relation to the crypto-asset “Qoin”.
Global Overview of Regulatory Actions
Binance has faced regulatory warnings and actions from several overseas regulators, including the UK Financial Conduct Authority, Japan Financial Services Agency, Italy’s Commissione Nazionale per le Societa e la Borsa (CONSOB), Monetary Authority of Singapore, Netherlands Central Bank (DNB), Ontario Securities Commission, and Thailand Securities Exchange Commission. On 27 March 2023, the Commodities Futures Trading Commission filed a civil enforcement action in the US District Court for the Northern District of Illinois against Changpeng Zhao, CEO of the Binance Group, and three entities that operate the Binance platform, alleging numerous violations of the Commodity Exchange Act (CEA) and CFTC regulations. The complaint also charges Samuel Lim, Binance’s former chief compliance officer, with aiding and abetting Binance’s violations.
