Binance Australia Derivatives has been ordered to pay a A$10 million civil penalty after Australia’s Federal Court found failures in how the platform classified clients for crypto derivatives trading. 

The ruling adds to earlier compensation paid to affected users and comes as Binance faces pressure in other markets in the region.

The Australian Securities and Investments Commission said the court ordered Oztures Trading Pty Ltd, which operated Binance Australia Derivatives, to pay the penalty after misclassifying more than 85% of its Australian client base over a nine-month period. ASIC said 524 retail investors were wrongly treated as wholesale clients between July 2022 and April 2023.

According to ASIC, those clients were given access to high-risk crypto derivatives without the consumer protections required for retail investors. The regulator said the group later recorded A$8.66 million in trading losses and paid A$3.89 million in fees.

ASIC says onboarding controls were not adequate

ASIC said Binance admitted serious failures in client onboarding and staff training. The regulator said some users could take a multiple-choice quiz without limit until they reached a passing score that allowed them to qualify as sophisticated investors.

The regulator also said senior compliance staff did not provide proper oversight of client applications and supporting documents. In one example cited by ASIC, Binance accepted a client as a professional investor after the person described themselves as an “exempt public authority” without enough verification.

Furthermore, the court penalty comes on top of about A$13.1 million in compensation that Binance Australia paid to affected clients in 2023 under ASIC oversight. Justice Moshinsky also ordered the company to contribute to ASIC’s legal costs.

ASIC Chair Joe Longo said, 

Binance said the issue was self-identified, reported to ASIC, and fully remediated in 2023.

Philippines move adds to regional scrutiny

Binance has also faced restrictions in the Philippines. Local outlet BitPinas reported in February that the main Binance app was no longer available for download on the Philippine Google Play Store, while the exchange’s website remained blocked for many users.

BitPinas said the removal followed earlier action by Philippine regulators against unlicensed offshore exchanges. The report said searches for Binance on the Play Store redirected users to local and region-specific alternatives instead of the main global app.