Binance Australia has been fined $10 million after misclassifying hundreds of retail clients as wholesale investors, exposing them to high-risk crypto derivatives that led to millions in losses.

The Australian Securities and Investments Commission (ASIC) said the cryptocurrency firm took $3.89 million in fees from 524 inadequately vetted clients, who collectively lost $8.66 million trading complex products meant for professional investors.

Between July 2022 and April 2023, Binance repeatedly breached its obligations as an Australian Financial Services Licence (AFSL) holder, allowing retail investors into volatile derivatives markets without the protections they are legally entitled to.

Binance variously failed to give retail clients a Product Disclosure Statement; make a Target Market Determination; maintain a “competent” internal dispute resolution system; provide financial services “efficiently, honestly, and fairly”; and “adequately train” its employees.

Wholesale trading clients do not have the same protections as retail investors – for example, they cannot access dispute resolution through the Australian Financial Complaints Authority (AFCA) – meaning that Binance’s deficiencies curtailed its clients’ rights as consumers.

Binance staff happily onboarded retail investors as wholesale professional financiers, even allowing clients to make “unlimited attempts” at passing a multiple choice quiz that’s required to be classified as a sophisticated investor.

One applicant claimed they were an ‘exempt public authority’ in a claim that was never challenged or verified by Binance.

Binance “failed to set up basic compliance checks and incorrectly approved hundreds of applications for complex, wholesale investor products,” ASIC chair Joe Longo said in announcing the new penalty, which is in addition to $13.1 million Binance repaid to the clients in 2023.

He added these shortcomings “left more than 85 per cent of their Australian customer base exposed to high-risk products they should never have been able to access,” and without “important consumer protections or rights.”

ASIC cancelled of the licence of Binance Australia Derivatives – the trading name of Oztures Trading Pty Ltd – in 2023 but the new fine reflects the gravity of the breach that, he said, “wasn’t just a technical breach – it directly resulted in over $12 million in client losses.”

Enforcement to protect a risk-hungry demographic

ASIC secured an all-time high of $349.8 million in civil penalties during the second half of 2025, the agency recently revealed, with $538 million returned to tens of thousands of customers and $6.9 million in infringement notices paid by malfeasants.

Growing exposure to exploitative practices recently led ASIC to warn Gen Z investors – 23 per cent of whom own cryptocurrency and two-thirds of whom said they are actively speculating on cryptocurrency – to ‘sense check’ the investment advice they are given.

With 63 per cent of Gen Z investors using social media for financial information, and 64 per cent taking advice from AI platforms, ASIC warned “relying on a narrow range of sources can increase financial risk, especially in an environment where markets and online trends move quickly.”

Escalating investment in cryptocurrency and other complex financial products has kept ASIC busy: in January, for example, BPS Financial was ordered to pay $14 million for “misleading and deceptive conduct” while promoting its Qoin Wallet without an AFSL.

“Given the nature of these products,” Longo said, “providers must have the appropriate licenses and authorisations, and investors must be able to make decisions based on clear and correct statements, especially as crypto products can be highly volatile, inherently risky and complex.”

Exhibit A: Bitcoin, the market-defining cryptocurrency that crashed early last year, soared to a record of around $183,000 (US$126,000) late in the year before again crashing to half its peak earlier this year, then slowly clawing back value in trading that has kept investors guessing.

Cracking down on unscrupulous operators

ASIC has been equally fierce in enforcing controls over other key investor tools, with Macquarie Securities recently fined $35 million for system failures that led to the misreporting of tens of millions of short sales, which regulators and investors use to gauge market conditions.

Short sales “are critical systems and controls that market participants need to be closely watching,” Longo said at the time, days before ASIC launched a financial complaints data dashboard that showed how problematic poor regulation of cryptocurrency has become.

Of the investment related complaints that ASIC received during the first half of 2025, some 2,182 resulted in monetary remedies – with a total of $4.3 million paid to resolve 650 service related issues and 428 cases relating to investor directed portfolio services.

In February, ASIC highlighted a 28 per cent year-on-year spike in reports of misconduct (ROMs), with 9,686 ROMs received during the second half of last year – including 4,261 relating to financial services and retail investor issues, and 1,542 alleged breaches of licence obligations.