The Australian arm of the world’s largest cryptocurrency exchange Binance has paid a $2 million fine for breaching the Spam Act after sending out 5.7 million marketing emails that didn’t have an easy way for people to unsubscribe.
Binance Australia sent out the emails either without a way for people to unsubscribe or by requiring that people login to their Binance account to do so, according to the Australian Communications and Media Authority (ACMA).
“Customers should not be made to log-in to stop receiving messages,” ACMA Chair Nerida O’Loughlin said.
“It is very concerning that we continue to see breaches of the spam laws from large size companies that should have good compliance practices in place.
“The Spam Act has been in force since 2003, so there are simply no excuses.”
Binance Australia has paid the $2 million fine and accepted a three-year enforceable undertaking that will see it undergo an independent review of its online marketing practices along with training staff.
Binance operates local arms in countries around the world to comply with local laws, like anti-money laundering and terrorism-financing obligations that require cryptocurrency exchanges to verify customers’ identities before accepting their cash.
Currently, the global cryptocurrency exchange has much bigger problems than a $2 million fine and court-enforceable undertaking at its Australian branch.
Red flag
The same crypto ecosystem that enjoyed an unprecedented bull run during the pandemic is now in crisis mode as inflation-triggered interest rate rises led to a risk-off attitude for speculative assets like tech stocks and cryptocurrency which ultimately saw the spectacular downfall of major cryptocurrency exchange FTX last month.
Embedded in the story of FTX’s collapse was Binance CEO Changpeng Zhao (who goes by the moniker CZ).
CZ blew on the FTX house of cards when he publicly announced concerns the company was running insolvent and said Binance would dump the native FTX token, FTT, ultimately triggering a bank run that culminated in FTX’s bankruptcy and the arrest of its CEO Sam Bankman-Fried.
Now financial and compliance situation at Binance is in the spotlight following an audit the company published which failed to adequately rumours that the same problems with FTX – the commingling of customer funds, poor financial controls, and liquidity concerns – are just as rife within Binance.
John Reed Stark, a former head of the US Securities and Exchange Commission’s internet enforcement arm, said on Twitter that Binance’s audit was a “red flag”.
“Binance’s ‘proof of reserve’ report doesn’t address effectiveness of internal financial controls, doesn’t express an opinion or assurance conclusion and doesn’t vouch for the numbers,” he said.
Crypto investors have taken a similarly dim view of the situation at Binance, yanking funds from the platform at a significant rate.
According to crypto analysis company Nansen, Binance’s 7-day net outflow – the total amount of money going out of the platform minus the money going in – for the week on Tuesday was more than $5.2 billion (US$3.6 billion).
CZ called the whole thing ‘FUD’ – an acronym for ‘fear, uncertainty, and doubt’ – and said the exchange has seen far higher withdrawal periods, including during both the FTX and Terra/Luna crises.