The investigation is notably based on the “classification of retail customers and wholesale customers” in what it said will be a targeted review.
The Australian Securities and Investments Commission (ASIC) has Announced will open an investigation into the local operations of Binance Exchange in the country. The specific investigation was prompted by the incorrect delisting of some users’ derivatives accounts based on faulty classification.
Binance, which has a local Australian unit, acknowledged the bug on Thursday after some of the affected users took to Twitter to share their complaints.
“Our team identified a small number of Australian users who were incorrectly classified as ‘Wholesale Investors’ on Binance. In accordance with Australian regulation, we were required to inform these users and close any of their own derivative positions with immediate effect,” the exchange said in an announcement. The exchange later said that a total of “500 users were affected by this remediation, which was a necessary action to ensure we were compliant with local laws. We serve more than 120 million users around the world and every user is important to us. We are in contact with affected users to finalize our compensation plans for them.”
Despite the rapid update to the trading platform, an ASIC spokesperson said that the trading platform has not informed the regulator about the recent bottleneck in its system.
“It has not yet reported these matters to ASIC in accordance with its obligations under its Australian financial services licence.”
The investigation is notably based on the “classification of retail customers and wholesale customers” in what it said will be a targeted review. There is no indication if the trading platform will pay any form of penalty at this time.
Binance CEO Changpeng “CZ” Zhao said that all affected traders will be compensated for their losses and encouraged community members to avoid all forms of FUD that may arise after the incident.
Binance ASIC Review Shows Exchange Scrutiny Increasing
The broader digital currency ecosystem has seen a very significant shift in trust over the last year due to the recent collapse of the FTX Derivatives Exchange.
With the test most of these industry stakeholders have been through, the zeal of regulators has grown as the need to protect consumers is higher than normal. While Binance remains the largest trading platform by daily trading volume, the exchange is still the one facing the most backlash from members of the press.
The exchange has been accused of aiding money laundering activities and aiding the use of its platform by sanctioned users from regions such as Iran. This FUD may explain ASIC’s quick opening of investigations, as the regulator would like to cover all bases before there is contagion.
Following this incident, Binance acted transparently and signs are already showing that this will be treated as a minor issue in their operations.
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Benjamin Godfrey is a blockchain enthusiast and journalist who enjoys writing about the real-life applications of blockchain technology and innovations to drive mainstream acceptance and global integration of emerging technology. His desire to educate people about cryptocurrencies inspires his contributions to renowned blockchain-based sites and media. Benjamin Godfrey is a lover of sports and agriculture.
