ASIC said the purpose of the investigation is about the classification activity between retail investors and professional investors at the exchange.
According to an announcement posted on February 24, the Australian Securities and Investments Authority (ASIC) is investigating derivatives trading activity on Binance Australia, the Australian branch of Binance.
Specifically, ASIC said that the purpose of the investigation is about the classification activity between retail investors and professional investors at the exchange.
This information comes less than 24 hours after Binance Australia abruptly closed the positions and accounts of some users in Australia with immediate effect.
The exchange claimed on Twitter that it had misclassified about 500 customers into the "Professional Investor" group and let them open futures trading accounts, so it was forced to make adjustments to avoid breaking the law. Australian law allows only licensed investors to engage in derivatives trading.
ASIC side shared: “ASIC was aware of Binance's announcement on social media, saying that they had made an error in classifying Australian users as professional investors. However, the exchange has not reported the incident to the Commission in accordance with its obligations under the Australian Financial Services License.”
Binance confirmed that it will compensate the affected users. Binance launched a derivatives service in Australia in July 2022. The exchange is only offering this service to eligible users, in order to comply with the Australian Act 2001, section 761GA.