The following was released by the Australian Securities & Investments Commission (ASIC) on Thursday, April 6, 2023
ASIC has today cancelled the Australian financial services licence held by Oztures Trading Pty Ltd trading as Binance Australia Derivatives (Binance). The licence cancellation was effected today in response to a request to cancel received from Binance yesterday.
Following the cancellation:
- with effect from 14 April 2023, clients will not be able to increase derivatives positions or open new positions with Binance;
- Binance will require clients to close any existing derivative positions before 21 April 2023;
- on 21 April 2023, Binance will close any remaining open positions.
The terms of the cancellation include a provision that that the cancellation has no effect on the requirement for Binance to continue as a member of Australian Financial Complaints Authority until the end of 8 April 2024.
ASIC has been conducting a targeted review of Binance financial services business in Australia, including its classification of retail and wholesale clients. On 29 March 2023, ASIC issued a notice of hearing under s915C of the Corporations Act 2001 to consider whether ASIC should cancel or suspend the AFS licence held by Oztures Trading Pty Ltd.
ASIC Chair Joe Longo said, “It is critically important that AFS licensees classify retail and wholesale clients in accordance with the law. Retail clients trading in crypto derivatives are afforded important rights and consumer protections under financial services laws in Australia, including access to external dispute resolution through the Australian Financial Complaints Authority.
“Our targeted review of these matters is ongoing, including focus on the extent of consumer harms,” said Mr Longo.
ASIC has repeatedly warned potential crypto users that crypto is risky and complex. Crypto derivatives pose additional risks to consumers through the operation of leverage.
Many crypto products and services are not regulated by ASIC. More than with other types of investments, crypto users should be prepared to lose any funds they invest in crypto.
“As we have said before, ASIC supports a regulatory framework for crypto with a focus on consumer protection and market integrity. The final decision as to the regulatory settings is one for Government,” said Mr Longo.
To understand how crypto works and the risks involved, see ASIC Moneysmart.
ASIC continues to take action to disrupt and deter harm and misconduct within its jurisdiction.
- On 15 December 2022, ASIC commenced civil penalty proceedings in the Federal Court against Finder Wallet Pty Ltd for alleged unlicenced conduct and inadequate risk disclosure in relation to the Finder Earn product
- On 23 November 2022, ASIC commenced civil penalty proceedings in the Federal Court against Block Earner for unlicensed conduct in relation to its crypto-asset based products.
- On 25 October 2022, ASIC commenced civil penalty proceedings in the Federal Court against BPS Financial for alleged misleading statements and unlicenced conduct in relation to the crypto-asset “Qoin”.
Oztures Trading Pty Ltd holds an AFS licence with authorisations to:
- issue and make a market in derivatives and foreign exchange contracts,
- deal in specified financial products on behalf of another person and
- provide financial product advice in specified financial products
to retail clients and wholesale clients.
Ownership of the licensee changed in January 2022 and it commenced offering derivatives as Binance Australia Derivatives in around July 2022.
Retail clients are afforded important rights and consumer protections under financial services laws in Australia, including:
- access to the licensee’s internal dispute resolution system;
- access to external dispute resolution through the Australian Financial Complaints Authority;
- arrangements to compensate retail clients for loss or damage suffered because of breaches of the licensee’s obligations;
- general advice warnings and statements of advice where personal advice is given;
- product disclosure statements and financial services guides;
- rights and protections related to a product intervention order, such as ASIC’s product intervention order relating to contracts for difference; and
- the design and distribution obligations which assist retail clients to obtain appropriate financial products by requiring issuers and distributors to have a customer-centric approach to designing, marketing and distributing financial products.
On 27 March 2023, the Commodities Futures Trading Commission announced that it had filed a civil enforcement action in the U.S. District Court for the Northern District of Illinois charging Changpeng Zhao, Chief Executive Officer of the Binance Group, and three entities that operate the Binance platform with numerous violations of the Commodity Exchange Act (CEA) and CFTC regulations. The complaint also charges Samuel Lim, Binance’s former chief compliance officer, with aiding and abetting Binance’s violations.
Binance group entities have been the subject of regulatory warnings and action from a number of overseas regulators. In addition to the CFTC, these include: