The Australian Securities & Investments Commission has canceled the financial services license held by Binance Australia Derivatives in response to a request from Binance yesterday.
The license granted Binance’s derivatives arm in the country to issue and operate a derivative and foreign exchange contracts market. It also allowed the Australian derivatives unit to advise customers.
ASIC Investigates Binance’s Definition of Wholesale Customers
Following the cancellation, clients would not be able to expand or open new positions from April 14, 2023.
Binance requires customers to close derivative positions before April 21, 2023, before they are automatically closed. ASIC does not allow retail investors to trade derivative products.
The ASIC affirmed that the cancellation did not rescind Binance’s access to dispute resolution.
Binance CEO Changpeng Zhao has not commented on the cancellation of the license.
Recently, Binance landed in hot water with the regulator after it closed the positions of traders incorrectly classified as wholesale. At the time, Binance customers needed to provide evidence that they were wholesale to trade derivatives.
After the mistake, ASIC launched a probe into how the exchange differentiates between retail and wholesale customers.
Binance Executive Criticizes Lack of Clarity in Australia
The ASIC does not regulate most crypto products and services but has filed civil actions against crypto firm BPS Financial for alleged inadequate crypto disclosures.
Last year, Binance’s current derivatives director, Leigh Travers, told BeInCrypto that the crypto industry in Australia lacks regulatory clarity.
“ As a leading actor in the domestic market, Binance Australia welcomes the responsibility to lead from the front in developing and supporting policy makers, regulators and law enforcement,” he wrote.
He added that the exchange is committed to four pillars, including maintaining adequate capital reserves, preventing market manipulation, compliance measures to combat terrorist funding and money laundering, and cooperation with law enforcement.
Travers recently announced that he would be stepping down as CEO of Binance Australia. Ben Rose, the former general manager of Binance New Zealand, succeeded him.
Binance Derivatives Business Under the Microscope
Its derivatives trading business in the U.S. has also landed Binance in hot water with U.S. regulators.
On March 27, 2023, Zhao, and Binance’s former compliance head Samuel Lim, were implicated in a civil enforcement action filed by the U.S. Commodity Futures Trading Commission.
U.S. authorities accuse three Binance entities, Zhao and Lim, of ignoring the rules of the Commodity Exchange Act by offering derivatives to U.S. institutions without registering as a derivatives exchange.
Binance allegedly encouraged U.S. firms to bypass Binance’s own geographical restrictions using a virtual private network.
Zhao called the charges “unexpected” and “disappointing.”
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