Australian Securities Regulator (ASIC) Terminates Binance Derivatives License
The recent update issued by The Australian Securities and Investments Commission (ASIC) confirmed the termination of the license awarded to Oztures Trading Pty Ltd. The cancellation halts the firm’s trading activities executed as Binance Australia Derivatives.
ASIC Terminates Binance Derivatives Australian Financial Services (AFS) License
The ASIC pronouncement issued on Thursday, April 6 morning is unsurprising given earlier indication that the securities watchdog was probing Binance operations in Australia. The action aligns with the confession by Binance Australia Derivatives that it would suddenly terminate certain positions and accounts, alleging the need to comply with the investor classification.
ASIC had served Binance with a notice of hearing on March 29, 2023, as stipulated under the Corporations Act 2001 s915C. The notice indicated that ASIC was considering temporarily suspending or canceling the AFS license held by Oztures Trading Pty Ltd since January 2022.
ASIC Issues Mid-April Deadline to Halt New Positions
The official announcement by ASIC indicated that Binance Australia Derivatives would cease increasing the derivatives positions. Also, the cancellation makes the firm incapable of initiating new positions within the platform after April 14.
ASIC statement directs Binance Australia Derivatives to inform the clients to expedite the closure of the existing positions before the April 21 lapses. The directive obliges to immediately terminate the positions that would emerge open after the Friday, April 21 deadline.
The statement restated that canceling the operating license would not invalidate Binance’s membership to the Australian Financial Complaints Authority until April 8, 2024.
Binance Pays Price of Incorrect Classification of Retail Clients
The securities regulator revealed that it had, for an extended period, identified Binance as a review target, particularly on the nature of the financial services offered. In particular, ASIC focused on probing the classification accorded by Binance towards wholesale and retail clients.
ASIC current chair Joe Longo confirmed the review involved ascertaining whether the classification accorded by Binance to the wholesale and retail customers complied with the laid-out security regulations.
Longo observed that retail clients involved in crypto derivatives trading have the privilege of consumer protection rights as stipulated by the Australian financial service laws. Remarkably, the securities regulator executive indicated that retail clients could resolve their disputes externally through the provisions provided by the Australian Financial Complaints Authority.
Scrutiny of Binance Conduct Exceeds Beyond Australia
The statement released by ASIC to the media cited the multiple lawsuits that global Binance is battling alongside the allegations levied against its chief executive Changpeng Zhao. Longo referred to the recent suit filed by the US Commodity Futures Trading Commission (CFTC), alleging Binance violated federal laws in offering unregulated commodities and derivatives to US residents.
Longo laments that other entities affiliated with the Changpeng-led Binance group are globally battling regulatory warnings and enforcement action. The regulator noted that several warnings traced back to violations perpetrated by Binance in 2021.
Longo’s sentiments echo the previous warnings issued by ASIC that crypto involved risky and complex undertakings. Typically, crypto derivatives pose inherent risks to consumers as they harbor designs that operate via leverage.
ASIC Prioritizes Protecting Australian Consumers and Market Integrity
Binance’s conduct and engagement with ASIC necessitated pursuing a focused resolution in Australia. Longo indicated that shutting down Binance Australia Derivatives was inevitable. The ASIC chair indicated that Australian residents would still utilize Binance spot trading.
A subsequent statement conveyed by Binance restated the continued running of the spot exchange product and its availability to Australians. The representative admitted that clients still utilizing the Binance Australia Derivatives approximated 100. The executive indicated that affirmed Binance had duly notified the users of shutting down as stipulated by the ASIC statement released earlier on April 6.
Executives behind the Binance Australia Derivatives portrayed readiness for ASIC decision to cancel the license through notifications suddenly dispatched in late February. Binance had warned the users of its decision to terminate several derivatives positions and users’ accounts.
The notification served by Binance to its customers warned that several users would face restrictions for failure to meet the requirements desired to become wholesale investors. The notice prompted Australian regulators to launch the targeted probe of its local derivatives operations.
The expulsion of Oztures Trading Pty Ltd from AFS licensees affirms that ASIC would not hesitate to evoke the legal provisions, particularly for operators of crypto derivatives wrongly offering high-risk products to incorrectly classified clients.
The AFS license cancellation affirms ASIC’s devotion to previously issued warnings that it would enforce the regulatory framework with a priority towards protecting consumers and Australian market integrity.
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