Binance is facing regulatory challenges in multiple jurisdictions worldwide.
Binance, the world’s largest cryptocurrency exchange, faces intensified regulatory scrutiny as authorities search its offices in Australia. According to a Bloomberg report on July 5 citing people familiar with the matter, the Australian Securities and Investments Commission (ASIC) invaded the company’s outlets in the country on Tuesday as part of an ongoing investigation into its derivative business.
Recall that Binance Australia decided to wind down the derivatives exchange in April after ASIC rescinded its regulatory license to operate in the country as a derivative broker while keeping its spot platform operational.
The world’s largest crypto exchange planned to offer derivative financial instruments to customers in the region through a partnership with Oztures Trading Pty Ltd. However, the plan changed following the license cancellation. ASIC is now investigating the company’s Australian division, reviewing its classification of retail and wholesale clients, as some users’ positions were closed due to incorrect classification as wholesale investors.
Binance Cooperating with Local Authorities
While ASIC neither confirmed nor denied the office searches, a Binance spokesperson disclosed that the company is cooperating with local authorities. Binance emphasized its commitment to meeting the country’s regulatory standards and serving its Australian users fully compliantly. The company aims to work closely with authorities to address any compliance requirements that may arise during the investigation.
“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,” a spokesperson for Binance Australia told Cointelegraph.
Aside from the ongoing investigation into the Binance derivatives business in Australia, the company had earlier faced regulatory scrutiny from the security regulator. In February, ASIC launched a probe into the company after the exchange abruptly closed certain derivatives positions. Binance explained at the time that its decision was driven by the need to comply with investor classification requirements, resulting in restrictions imposed on users who did not meet the qualifications to be considered wholesale investors.
Binance Faces Global Regulatory Challenges
Apart from Australia, Binance is facing regulatory challenges in multiple jurisdictions worldwide. French authorities recently raided the exchange’s subsidiary in France to investigate the alleged illegal provision of digital-asset services and aggravated money laundering. The company’s CEO, Changpeng Zhao (CZ), however, denied the rumors of money laundering, stating that the exchange is in compliance with all laws in France and other markets of operation.
In the United States, the Securities and Exchange Commission (SEC) filed a lawsuit against Binance and its CEO, accusing them of mishandling customer funds, misleading investors and regulators, and violating securities rules. Responding to the civil charges, the company said it plans to defend its platform against the SEC’s claims vigorously. Binance and Zhao also face a Commodity Futures Trading Commission (CFTC) lawsuit.
The crypto exchange has recently been ordered to cease operations in Belgium. The country’s market regulator, the Financial Services and Markets Authority, asked the company to suspend all its exchange and custody offerings for violating local rules and regulations.
In Belgium, the company’s application to secure a legal operating license was reportedly rejected due to its inability to meet the country’s regulatory standards.