A day after Binance Australia Derivatives sent notifications of account closures to users it wrongly classified, regulators in Australia said they’re looking into the company.
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Binance Australia Derivatives sent an abrupt message to a select group of users on Feb. 23, saying it would be immediately closing their accounts due to a false classification of some users as “wholesale clients.”
This incident caused a flurry of responses from users on social media, and the next day, the Australian Securities and Investments Commission (ASIC) announced it would be conducting a “targeted review” of Binance’s local derivatives operations.
According to a statement from a spokesperson of the regulator on Feb. 24, the review of Binance Australia Derivatives will include the company’s “classification of retail clients and wholesale clients.”
The spokesperson added:
“It has not yet reported these matters to ASIC in accordance with its obligations under its Australian financial services license.”
However, the spokesperson said the regulator “is aware of Binance’s social media posts,” which were made shortly after users began posting screenshots of the notices on Twitter.
Binance took to social media to clarify the incident, saying that it closed derivatives positions and accounts for some users who they incorrectly classified as “wholesale clients.” Currently the platform is only available to wholesale investors.
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A few hours after its initial posts, Binance said 500 users were affected by the remediation.
500 users were affected by this remediation, which was a necessary action to ensure we stay compliant with local laws. We serve over 120 million users globally and every user is important to us. We are in contact with the affected users to firm up our compensation plans for them.
— Binance (@binance) February 23, 2023
A spokesperson from Binance reiterated that the exchange is “committed” to adhering to local Australian laws.
Changpeng CZ Zhao, the co-founder and CEO of Binance, tweeted that all users will be compensated of any losses and to ignore the FUD. He also mentioned that the company is looking into the situation to see if reopening futures in Australia will be an option in the future.
Users will be compensated for any loss incurred due to the force close of positions. Protecting users is #1 priority @Binance.
We will review the situation and see if/when we can re-open futures offerings in Australia. Thank you for your understanding, & please ignore FUD (4). https://t.co/dRG0u8VEuF
— CZ Binance (@cz_binance) February 23, 2023
The cryptocurrency exchange is currently the largest in the world and has been very public about its efforts to comply with regulatory requirements of its local operations.