Australia's securities regulator announced today that it would be canceling the operating license for Binance's derivatives business.
The specific entity is Binance Australia Derivatives, and the license allowed it to offer over-the-counter (OTC) derivative products to Australian users.
Importantly, the cancellation comes a day after the crypto exchange requested the move, reads the announcement from the Australian Securities & Investments Commission (ASIC).
"Following recent engagement with ASIC, Binance has chosen to pursue a more focused approach in Australia by winding down the Binance Australia Derivatives business," a Binance spokesperson told Decrypt in a prepared statement. "This does not affect Binance’s continued commitment to the development of the local blockchain and digital assets industry and Australians can continue to enjoy the use of our spot exchange product."
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Derivatives traders, which the spokesperson said was "approximately 100," are expected to close any existing positions they still have open by April 21, 2023. The exchange will close all open positions after this date.
Binance's regulatory hurdles
The move comes amid what an ASIC spokesperson described as a "targeted review" of Binance that began in February.
At that time, 500 user positions were liquidated after the exchange determined that these users had been incorrectly labeled as "wholesale investors" rather than retail investors.
In Australia, a wholesale investor is usually understood as one who is more experienced with trading and financial assets and does not need the same guardrails and protections as their retail counterparts.
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Our team identified a small number of Australian users who were incorrectly classed as ‘Wholesale Investors’ on Binance.
As per Australian regulation, we were required to inform these users and close any of their own derivative positions with immediate effect.
In the United States, the CFTC has taken much more aggressive steps against the crypto exchange. The CFTC filed a lawsuit against Binance last month, charging the firm with multiple trading violations, including failing to register its derivatives business before offering it to U.S. users.
The lawsuit also alleged that the crypto exchange had been trading against its own clients.
