• 23 July, 2024
News

Binance Australia Incorrectly Classified Users as “Wholesale Investors’’

Users of Binance Australia Derivatives allege the digital asset platform sent out abrupt notifications on February 23 stating that it has started closing some derivatives positions and accounts.

In a notice shared on Twitter, the crypto exchange clarified that certain individuals were incorrectly categorized as “wholesale investors”. Nonetheless, Binance was required by law to promptly suspend services to these accounts and notify individuals impacted.

The exchange continued by saying, “We have already contacted all impacted users and will fully compensate them for their losses incurred while trading derivatives on Binance.”

Moreover, Binance Australia stated that impacted customers must provide fresh information or proof in order to regain access to and use services from their accounts. This is to prove the user qualifies as a wholesale investor. Furthermore, the exchange noted that they are developing a plan to compensate and provide remediation to users who are owed refunds due to the recent incident.

Following this, Binance co-founder Changpeng Zhao reassured users on Twitter that security is the company’s primary concern. CZ further stated that any users who had trading positions closed without their consent will be paid in full for their losses.

“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),” he added.

Since the launch of Binance Australia, only qualified wholesale traders in Australia can access the platform’s trading services. This policy complies with section 761GA of Australia’s Corporations Act (2001).

Users must also pass one or more of the exchange’s tests in order to be considered a wholesale client. This comprises a wealth test, professional investor test, large business test, a sophisticated investor test, and additional verification.

The applicant must have either a net worth of at least AUD $2.5 million or an annual gross income of at least AUD $250,000 for the previous two financial years in order to pass the wealth test.

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