Binance offices in Australia raided by ASIC officials

abdelaziz Fathi

Australia’s corporate regulator has reportedly conducted a search at the local offices of Binance as part of an ongoing investigation into the derivatives business operated by the cryptocurrency exchange.

According to a Bloomberg report, one particular aspect under review by the Australian Securities and Investments Commission (ASIC) is the classification of clients into retail and wholesale investors.

On its part, Binance said that it “is focused on meeting local regulatory standards in order to serve our users in Australia in a fully compliant manner.”

Earlier in April, the Australian regulator canceled Binance Australia’s derivatives license at the world’s largest cryptocurrency exchange’s own request.

The development comes amid debate and controversy around Binance Australia after it closed derivatives positions of some users. The crypto exchange stated that it had incorrectly classified 500 Australian users as “wholesale investors.”

As per regulation, Binance was required to terminate services to these accounts immediately, but said it will fully compensate affected users for the losses incurred while trading derivatives.

Meanwhile, ASIC has been conducting a “targeted review” of Binance financial services business in the country. As part of the review, the watchdog has been looking into Binance’s classification of retail and wholesale clients. The regulatory body also expressed concern about the platform’s compliance with Australian Anti-Money Laundering and Counter-Terrorism Financing (AML/CTF) laws.

Binance resumed offering its futures, options, and leveraged tokens products to Australian crypto traders in July 2022. The local arm launched over the counter (OTC) derivative products for wholesale customers under its Australian Financial Services License.

Binance has faced its fair share of regulatory challenges in earlier times. In 2019, the ASIC warned local investors against Binance, stating that the exchange is operating in the country without proper licensing. Since then, Binance has taken steps to comply with Australian regulations, including registering with the Australian Transaction Reports and Analysis Centre (AUSTRAC), which is the country’s financial intelligence agency responsible for anti-money laundering and counter-terrorism financing.

During his speech at the Australian Blockchain Week, Ben Rose, Binance’s regional manager, revealed that the Australia’s team received an abrupt notification in the middle of the night, stating that the exchange would be “cut off” from Australia’s banking system.

This unexpected action affected approximately 1 million customers located in Australia, according to Rose. He emphasized that there was no prior warning, consultation, or avenue for redress provided before this decision was taken.

The sudden severance from the banking system has undoubtedly posed challenges for Binance Australia in conducting its operations and serving its customer base, he added.

“We received 24 hours’ notice of debanking at 11:30 pm in the evening, that was later turned into 12 hours, and so we had our banking cut off. The reasons given were not entirely clear and didn’t look that great in the media,” said Rose.

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