Binance Australia’s financial licence cancelled after ASIC action over crypto concerns

Binance Australia will close its derivatives trading business after ASIC cancelled its licence, marking an end to trading operations for the crypto giant.

Binance founder and chief executive Changpeng Zhao. Picture: AFP

The corporate regulator has cancelled Binance’s Australian Financial Services licence in response to the exchange’s request, but only on the condition the crypto giant remains a member of the financial complaints authority.

Binance, one of the world’s largest crypto trading platforms, requested the Australian Securities and Investments Commission cancel its licence on Wednesday just days after facing charges in the United States from financial regulators.

The cancellation means Binance’s Australian clients will be barred from increasing or opening new derivatives positions as of April 14, and all clients will be required to close out positions by April 21.

Any clients who fail to close their open positions by April 21 face Binance closing out remaining derivatives positions.

The move to imminently shut down Binance Australia’s derivatives operations marks the closure of the firm’s only division licensed to provide derivative products under the AFSL held by its corporate entity, Oztures.

Binance secured the Australian Financial Services licence after purchasing Oztures. It offered derivatives through the business in July 2022, and the exchange’s chief executive, Changpeng Zhao, claimed Australia’s “crypto market is a unique opportunity due to the robustness of the financial services regime”.

Binance came to Australia tempted by the country’s “unique opportunity” but pulled the plug on its business on Thursday.

ASIC has been pursuing Binance’s Australian business in recent months, hitting the firm with a notice of hearing on March 29 demanding it consider whether it should face suspension or cancellation of its finance licence.

Binance said it was culling its AFSL after “recent engagement with ASIC”, noting it would pursue “a more focused approach”.

“Binance’s more focused approach in Australia will continue building on the locally registered spot exchange (operated by Binance Australia). Local users can continue to access and enjoy Binance Australia’s spot trading platform,” Binance said.

“This does not affect Binance’s continued commitment to the development of the local blockchain and digital assets industry.”

ASIC chair Joe Longo said it was critical that AFS licensees properly classified retail and wholesale clients “in accordance with the law”.

“Retail clients trading in crypto derivatives are afforded important rights and consumer protections under financial services laws in Australia, including access to external dispute resolution through the Australian Financial Complaints Authority,” Mr Longo said.

“Our targeted review of these matters is ongoing, including focus on the extent of consumer harms.”

One of the conditions of cancelling Binance’s licence was that the crypto trading firm continue to be a member of the Australian Financial Complaints Authority until the end of April 8, 2024.

Binance Australia chief executive Leigh Travers announced he would step down from the firm in early March, after joining the crypto outfit in August 2021.

Binance New Zealand boss Ben Rose took on the Australian business as part of the change on March 31, just two days after ASIC hit the crypto firm with its warning.

Binance Australia’s former chief, Leigh Travers.

Mr Longo has sounded several warnings about cryptocurrency products since taking on the job as ASIC chair.

The regulator has warned that crypto derivatives products posed additional risks to consumers given the leverage risks involved in the trades.

This could result in losses magnified for users.

“As we have said before, ASIC supports a regulatory framework for crypto with a focus on consumer protection and market integrity,” Mr Longo said.

“The final decision as to the regulatory settings is one for government.”

ASIC has taken several actions against crypto players, including comparison website Finder over its crypto wallet product, Block Earner, and BPS Financial over allegedly misleading statements relating to crypto token Qoin.

Binance was hit with action last week by the US Commodity Futures Trading Commission, which launched action against Mr Zhao and a compliance executive, Samuel Lim, alleging they had conspired to create an “illegal” exchange and a “sham” compliance program.

The CFTC alleges Binance engineered “wilful evasion” of US law, “while engaging in a calculated strategy of regulatory arbitrage to their commercial benefit”.