Binance’s One Mistake Proves Costly For Traders Across Australia; Here’s Why

Binance News: On February 23, users of Binance Australia Derivatives received abrupt alerts from the digital asset platform informing them that it was beginning to terminate a number of derivatives holdings and accounts. Several tweets show that users who did not fit the criteria to be a “wholesale investor” were informed that their positions would be closed and that they could no longer utilize the crypto derivatives platform.

Binance Closes Multiple Trading Accounts

Trading in cryptocurrency futures is only restricted to institutional and high-volume investors on the Binance platform in Australia. An examination of the onboarding procedure was apparently what led the crypto giant to find the mismatch. These accounts, which had been mislabeled in the beginning, have since had their positions closed. Additionally, the owners of these accounts will lose their access to the futures market on Binance.

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Users had been advised that in order to continue utilizing Binance Australia’s derivatives platform, they are required to submit the requisite evidence to demonstrate that they satisfy the requirements for the role of “wholesale investor.” The letter went on to explain that Binance Australia Derivatives is working on a remediation and compensation plan for customers to whom the company owes any refunds as a result of the change.

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.

— Binance (@binance) February 23, 2023

Despite this, customers commented on Binance’s post on Twitter, with one user from Australia stating that they were unable to stake their cryptocurrency owing to complications in their region. Another user stated that flexible earn was no longer available in Australia, which prompted the Binance support team to respond that they would investigate the situation.

CZ Announces Compensation

Changpeng Zhao, commonly referred to as “CZ”, addressed the matter on Twitter, assuring customers that the cryptocurrency exchange’s primary concern is, and will continue to be, the protection of their funds. CZ further stated that users would receive full compensation for any losses that were sustained as a result of the forced closure of trading positions. He was quoted as saying:

We will review the situation and see if/when we can re-open futures offerings in Australia. Thank you for your understanding.

In July of 2022, the crypto exchange introduced Binance Australia Derivatives. In the beginning, the trading services offered by the platform had been restricted to qualified wholesale customers in Australia. This policy in question complies with the requirements of section 761GA of the Corporations Act of 2001 in Australia.

In addition, users have to succeed at one or more of the exchange’s tests in order to be considered a wholesale client by the organization. This includes a wealth test, professional investor test, large business test, sophisticated investor test and additional verifications. According to the wealth test, the user needs to demonstrate that they have a net worth of at least AUD $2.5 million or that they have earned at least AUD $250,000 annually in gross income over the course of the previous two financial years.

Reacting to this particular Binance news, the exchange’s native token, BNB, fell victim to a widespread FUD and as things currently stand, BNB’s price is changing hands at around $310, which represents a 0.5% drop in the past hour, compared to a decrease of 3.5% over the previous seven days.

Also Read: CZ Says To Reconsider Opening Binance Derivatives in Australia