Australian Regulator Launches Review into Binance Derivatives

The Australian Securities and Investment Commission (ASIC) has announced a review of Binance’s derivatives business in the country.

Binance, already battling with the regulatory challenges in the U.S., has landed in trouble with the ASIC. On Thursday, Binance closed the derivatives positions of some traders incorrectly classified as “wholesale investors.” The company also announced compensation plans for the users affected by the action.

The ASIC does not allow retail investors to trade derivatives. Hence, Binance’s customers must submit evidence proving that they are wholesale investors to trade derivatives. But, Binance’s action has drawn the attention of the Australian regulator – ASIC, and they are now conducting a targeted review of the local derivatives business of the company.

Exchange Failed to Report Mishap to Australian Regulator

An ASIC spokesperson told Bloomberg they are “aware of Binance’s social media posts overnight stating that it had incorrectly classed a group of Australian consumers as wholesale investors.”

Even though it closed the derivative trades from ineligible traders, according to the spokesperson, it has not yet completed its obligations of reporting to regulators. Now, the Australian regulatory body will investigate the classification of Binance regarding retail and wholesale clients.

Changpeng Zhao, the Chief Executive Officer of the firm, clarified that they are reviewing the situation. He further asked users to ignore FUD (Fear, Uncertainty, and Doubt).

In contrast to Binance’s claims, a wholesale client alleges that their positions were also closed. They tweeted that they fulfilled the requirements with a wholesale client certificate, yet they were not given advance warnings or a grace period.

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BeInCrypto has reached out to company or individual involved in the story to get an official statement about the recent developments, but it has yet to hear back.

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