Binance under investigation by Australian regulator after closing 500 derivatives positions


  • The Australian Securities and Investments Commission said that a targeted review of Binance was released after the crypto exchange closed 500 positions opened by local users.
  • Binance closed these derivatives positions after finding that some traders were incorrectly categorized as wholesale investors.
  • The crypto exchange promised to compensate users for any losses incurred when trading derivatives and futures products on the platform.

The Australian Securities and Investments Commission (ASIC) said that a targeted review of Binance was released after the cryptocurrency exchange closed 500 positions opened by local users on Feb.

We are conducting a targeted review of Binance Australia Derivatives’ financial services business in Australia, including its classification of retail clients and wholesale clients.

On Thursday, the crypto heavyweight exchange tweeted that a “small number of Australian users who have been misclassified as wholesale investors” have been discovered by the exchange’s Australian derivatives team.

The crypto exchange proceeded to liquidate around 500 positions, saying affected users were notified and would receive full compensation for losses incurred in their trades.

Local laws dictate that merchants in the wholesale category must have extensive trading experience and have high liquidity to open business. Merchants who do not meet the requirements are classified as retail users and cannot access derivative products by law.

Following the incident on Thursday, ASIC officials said an investigation into Binance’s derivatives division was ongoing. The Australian regulator also noted that Binance has yet to report the incident “in line with its obligation under its Australian Financial Services License, Decrypt reported on Friday.

Binance investigated beyond borders

The major exchange has faced scrutiny in multiple jurisdictions as some regulators tighten policies around crypto beyond 2022. Last year, a basket of digital asset stakeholders imploded, costing retail and institutional investors millions of billions of dollars.

Earlier reports said Changpeng Zhao’s company was assessing its position in the US amid investigations by watchdogs such as the Commodity Futures Trading Commission (CFTC), the Internal Revenue Service (IRS) and the Department of Justice (DOJ). However, the exchange is not planning to pull out of America any time soon, according to reports.

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