ASIC raids Binance offices as part of derivatives probe

Australia’s finance watchdog has executed search warrants at three offices of the major cryptocurrency firm Binance. See why.

Investigators from the corporate regulator have raided the Australian offices of the world’s biggest cryptocurrency exchange, Binance.

Australian Securities and Investments Commission officers executed a search warrant on three premises associated with Binance on Tuesday, sources said.

The regulator is investigating Binance over issues including its now-defunct derivatives business.

It has also been investigating clients of the exchange, which has more than 250,000 Australian customers.

In the US, the company and its founder, Changpeng “CZ” Zhao, are being sued by two regulators over alleged breaches of securities and anti-money laundering and counter terror finance laws. It has denied the allegations.

Australian Securities and Investments Commission is investigating Binance over issues including its now-defunct derivatives business. Picture: Justin Sullivan/Getty Images via AFP

Binance has been all but cut off from the Australian banking system after its payment provider, Byron Bay fintech Zepto, booted it off its systems last month.

One of the locations raided by ASIC on Tuesday is believed to have been in Byron Bay, however, a Zepto spokesperson said the company’s office had not been raided.

In April, Binance Australia handed in its Australian financial services license, which allowed it to sell derivatives, rather than face it being cancelled by ASIC.

An ASIC spokesperson said that the regulator’s review of Binance’s affairs was “ongoing”.

“We are unable to confirm or deny any operational detail such as possible searches,” he said.

A Binance spokesperson said: “We are cooperating with local authorities and Binance is focused on meeting local regulatory standards in order to serve our users in Australia in a fully compliant manner.”

The regulator is investigating whether Binance wrongly classified ordinary retail clients as wholesale clients – a category reserved for sophisticated and rich investors who get fewer protections.

ASIC is also investigating the affairs of some Binance customers and on April 29, 2021, issued the company a formal demand for company documents, believed to relate to client accounts.

Since then, ASIC has sent Binance nine further demands for customer documents, most recently in May this year, as well as making two demands for “reasonable assistance” with its investigations – a category of help which ASIC says can include handing over passwords or opening safes.

Mr Zhao is not being investigated here and has not been accused of any wrongdoing by ASIC.

In US court documents authorities there claim Mr Zhao is the ultimate owner of Binance.

The US Commodities Futures Trading Commission lodged a lawsuit in March accusing Mr Zhao and Binance of deliberately flouting laws designed to prevent terrorism finance and money laundering.

Last month, a second US agency, the Securities and Exchange Commission, also launched legal action, telling a court that Binance and Mr Zhou blatantly disregarded laws designed to protect American investors and “enriched themselves by billions of U.S. dollars while placing investors’ assets at significant risk”.

Originally published as ASIC raids Binance offices as part of derivatives probe