The Australian Securities and Investments Commission (ASIC) has announced that it is reviewing the derivatives services offered by Binance Australia, the local subsidiary of the Binance. ASIC is reportedly investigating wrong classification of investors. Earlier, Binance Australia had admitted that it had put 500 investors wrongly in wholesale investors’ category, media reports said.
The review comes as part of ASIC’s ongoing efforts to monitor and regulate the country’s rapidly growing cryptocurrency sector. ASIC is particularly concerned about the risks associated with leveraged trading, which allows traders to magnify their gains and losses by borrowing funds from the exchange.
In a statement, an ASIC spokesperson said that the regulator is “aware of the growth in popularity of cryptocurrency derivatives and is currently reviewing the operation of several platforms in this space, including Binance Australia.”
The spokesperson added that ASIC is “focused on ensuring that market participants are appropriately licensed and supervised and that they comply with their obligations under the law, including those relating to consumer protection and market integrity.”
Binance Australia has responded to the news by saying that it is “committed to working constructively with regulators to shape the future of our industry, while also providing our users with a safe and reliable trading experience.”
The exchange also stressed that it “takes compliance very seriously” and has “invested heavily in building a robust compliance program that incorporates anti-money laundering and know-your-customer processes.”
The review of Binance Australia’s derivatives services follows a similar investigation by ASIC into the derivatives trading platform of another major cryptocurrency exchange, Kraken. Last year, ASIC raised concerns about the high risks involved in leveraged trading and warned investors to be cautious when using such platforms.
