The Australian Securities and Investments Commission (Asic) has revoked the local financial services license of Binance, the world's largest cryptocurrency exchange. The regulatory body found that Binance had incorrectly classified hundreds of retail customers as wholesale investors, which breaches Australian law.
Retail customers are entitled to more consumer protections under Australian regulations, including the right to dispute resolution. As a result of this decision by Asic, starting 14 April, Binance clients will not be able to increase their derivatives positions or open new ones. Furthermore, any remaining open positions must be closed by 21 April.
In a statement regarding the cancellation, Jane Ballard from Asic said: "It is essential for firms operating within our jurisdiction to adhere strictly to our rules and regulations. We have identified significant concerns with how Binance has been classifying its customer base and have taken appropriate action."
Binance CEO Changpeng Zhao expressed his disappointment at this development but assured users that they would comply with all necessary requirements moving forward:
"We take compliance very seriously at Bfinance; we believe it is vital for maintaining trust in our platform," he stated. "While we disagree with some aspects of ASIC's assessment on classification issues concerning retail vs wholesale investors; we respect their decision and will work diligently towards rectifying these matters."
This setback comes as another challenge amidst ongoing legal troubles faced by both Zhao and his company in other jurisdictions such as United States where they face an ongoing lawsuit filed by US commodity market regulators who allege wilful evasion of US laws.
Andrew Thompson from Melbourne-based law firm Fincourt Legal shared his view on this situation:
"The recent actions against popular exchanges like BitMEX highlight increased scrutiny over crypto-asset service providers' adherence global regulatory requirements," he explained further adding that enterprises should expect similar enforcement actions worldwide if they fail adhering established protocols meant protecting consumers maintain adequate AML/CFT controls.
In light of these events, it is essential for cryptocurrency exchanges and related businesses to ensure that they are operating within the confines of the law. Failure to do so may result in regulatory crackdowns and significant consequences for both their company's reputation as well as their customers' trust.