Binance admitted to wrongly categorizing 500 of its Australian users as wholesale investors, on Thursday. As a result, their derivative positions were terminated. However, the cryptocurrency exchange has vowed to reimburse all affected users fully.
Regulators are increasing their scrutiny of the crypto industry after the collapse of the FTX exchange last year, bringing Changpeng Zhao’s digital asset exchange into the spotlight. The billionaire’s exchange is now facing questions about its safety and security, as well as the effectiveness of the current regulatory framework.
ASIC’s Review of Binance Australia
After the incident in which the crypto exchange mistakenly categorized 500 Australian users as “wholesale investors,”. The Australian Securities and Investments Commission (ASIC) revealed on Friday that it would initiate a focused assessment of Binance Australia’s derivatives business. The review aims to scrutinize the exchange’s “classification of retail and wholesale clients.”
It is important to note that local regulations prohibit retail traders from engaging in futures and financial derivatives trading. Therefore, Binance’s error forced positions to close for these 500 Australian users.
An ASIC spokesperson acknowledged Binance’s social media post, which reported the misclassification of users.
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However, the cryptocurrency exchange still needs to formally report the matter to ASIC in compliance with its Australian Financial Services Licence obligations.
Regulators are intensifying their scrutiny of the crypto industry, with Binance global business and the US platform facing multiple regulatory investigations. The exchange’s spokesperson stated that the exchange is committed to complying with all relevant Australian laws.
Zhao, behind the digital asset exchange, said it would review the situation before reopening futures offerings in Australia. Billionaire Zhao said he urged people to ignore uncertainty and doubt (FUD) in the crypto market.
In conclusion, Binance’s misclassification of 500 Australian users has resulted in a specific assessment of its derivatives business by ASIC. The company has committed to fully compensating all impacted users, while ASIC continues to investigate the matter.
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