Binance asked the Australian Securities & Investments Commission (ASIC) to cancel its derivatives license, according to a report by the regulator. The request was made by Binance after the Australian regulator began a “targeted review” of the crypto exchange. The regulator mentioned the date line for the close of trading. The Binance Australian Derivatives allowed the crypto exchange to offer Australian users over-the-counter (OTC) derivative products.
ASIC said that Binance’s derivative clients in the country could neither open nor increase their existing trade positions from April 14. The credit exchange would have to close remaining trading positions by April 21, 2023. ASIC Chair Joe Longo said that their “targeted review” remained “ongoing” and included “focus on the extent of consumer harms.”
In February, Binance reported that a “small number” of its customers in Australia were classified as “wholesale investors.” At that time, Binance liquidated about 500 user positions after determining that these retail investors had been given the incorrect label of “wholesale investors.”
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The trading classification “wholesale investors” is for experienced investors. It allows them to access financial products that are considered to be sophisticated. In Australia, wholesale investors are considered to be more experienced in matters related to trading and financial assets, whereas retail investors are offered more guardrails and protections. In the U.S., this classification of “wholesale investors” is somewhat similar to the designation of “qualified investors.”
As of now, Binance is facing less scrutiny in Australia, when compared with the U.S. In March, the Commodity Futures Trading Commission (CFTC) filed a lawsuit against the crypto exchange for multiple trade violations, one of which includes allegedly offering American users trading of derivatives products before it had registered its derivatives business in the U.S. Another allegation includes trading against its own clients.
The CFTC is not the only U.S. regulator that has filed a lawsuit against Binance. Others who have filed suits against the crypto exchange include a government department, a statutory body and an oversight agency–Department of Justice (DOJ) the Internal Revenue Service IRS and the Securities and Exchange Commission (SEC).
After the massive collapse of FTX and charges against its founders and senior executives, government and regulatory bodies have been focusing on the alleged violations by others in the crypto industry, which remains fairly unregulated, as of now.
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