An Australian federal court has imposed a $6.9 million fine on Binance’s local derivatives division for wrongly classifying retail investors.
The ruling marks a major regulatory action as authorities tighten oversight on crypto exchanges and investor protection practices.
The case was initiated by the Australian Securities and Investments Commission in 2024, targeting Binance Australia Derivatives over compliance failures.
Regulators argued that the platform incorrectly categorised a large share of its users, allowing them to access high-risk crypto derivative products.
The court found that more than 85% of impacted clients were wrongly identified as wholesale investors instead of retail participants.
A total of 524 retail users were granted access to complex derivatives trading between July 2022 and April 2023.
These financial instruments are typically limited to professional or institutional traders due to their elevated risk profile.
The affected users collectively recorded losses of approximately $6 million during the period under review.
In addition to trading losses, the same group paid around $2.69 million in associated fees to the platform.
The court highlighted weaknesses in Binance’s onboarding procedures, which failed to properly assess client eligibility.
Users were reportedly allowed to repeat qualification tests multiple times until they achieved a passing result.
In several instances, the classification process relied on unverified self-declared information from users.
Binance admitted to the compliance shortcomings through a statement of agreed facts submitted during proceedings.
The company stated that it had identified the issue internally and implemented corrective measures in 2023.
The financial penalty follows an earlier $9 million compensation payout made to affected clients.
Authorities emphasised that the enforcement action underscores the importance of robust compliance systems in the digital asset sector.
The case signals increasing global scrutiny on crypto derivatives platforms, particularly those serving retail investors.
Regulators are reinforcing expectations that crypto firms must uphold standards comparable to traditional financial institutions.
The decision reinforces a broader regulatory push to ensure that investor protections are not compromised in emerging markets.