- Crypto exchange Binance has closed accounts of some users based in Australia over compliance reasons
- The exchange stated that these users were mistakenly classified as wholesale clients
Binance – the largest crypto exchange in the world by trading volume – announced that it closed derivate positions of some users, earlier today. The users affected by this move are solely based in Australia, and the Australian regulation influenced the action. In a notice put on Twitter, the crypto exchange stated that some users were incorrectly classified as “wholesale investors”.
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However, as per regulation, Binance was required to terminate services to these accounts immediately and notify those affected. The exchange further said, “We have already contacted all impacted users and will fully compensate them for their losses incurred while trading derivatives on Binance.”
Binance users lose access to account due to compliance
Moreover, in a notification sent to the users, Binance stated that the affected users have to provide fresh information or evidence to regain access and services to their accounts. This is to prove that the user meets the requirements needed to be classified as a wholesale investor.
A user on Twitter said,
1) I onboarded as a wholesale client with the Wholesale client certificate which is literally the requirement
2) No advance warning, no grace period, no time to upload docs. Positions nuked. jfc— illiquidity providoooor (@skyquake_1) February 23, 2023
The crypto exchange launched Binance Australia Derivatives in July 2022. From the start, the platform had allowed trading services only to eligible Australian wholesale users. This policy is in compliance with Australia’s Corporations Act 2001, section 761GA.
Moreover, to be classified as a wholesale client, users have to satisfy one or more of the exchange’s tests. This includes a wealth test, professional investor test, large business test, sophisticated investor test, and other verification. Under the wealth test, the user should prove to have at least AUD $2.5 million in net assets or at least AUD $250,000 a year in gross income for the past two financial years.
Regarding the incident, Changpeng Zhao, the co-founder of Binance, assured on Twitter that the crypto exchange’s top priority continues to be protecting users. CZ added that users would be fully compensated for the loss incurred due to the forced closure of trading positions. He further said,
“We will review the situation and see if/when we can re-open futures offerings in Australia. Thank you for your understanding, & please ignore FUD (4).”
