It has been stated that the Australian Securities and Investments Commission (ASIC) will launch (1) an investigation into the country's local activities of Binance Exchange.
Because of a misclassification error, the exchange inadvertently closed the derivatives positions of certain customers, prompting the exchange to launch the current investigation.
Binance, which has a local Australian business, admitted the error on Thursday after some of the impacted users took to Twitter to voice their dissatisfaction with the exchange platform.
"We were compelled to warn these users and liquidate any of their derivative holdings with immediate effect, as per Australian rules," the exchange stated in an announcement.
After further investigation, the exchange reported that 500 users were affected by the mistake, which was essential for them do to guarantee that they stay compliant with the local legislations.
"Every single one of the nearly 120 million users we have worldwide is essential to us. We are now communicating with the impacted users to finalize our compensation arrangements for them."
Despite the rapid update provided by the trading platform, a spokeswoman for ASIC stated that the trading platform had yet to alert the regulator of the recent logjam that occurred in its system.
"It has not yet notified these problems ASIC per its requirements under its Australian financial services license," the sentence reads. "[T]here has been no breach of these obligations."
An important examination aspect is the "categorization of retail clients and wholesale clients" in what has been described as a targeted review. At this point, there is no indication as to whether the trading platform will be required to pay any fine.
Binance CEO Changpeng "CZ" Zhao stated that every impacted trader would be paid for their losses and urged people in the community to avoid any fear, uncertainty, and doubt (FUD) that may occur of the incident.
The ASIC's Examination of Binance Demonstrates That More Attention Is Being Paid to Exchanges
The recent failure of the FTX Derivatives Exchange has caused a huge shift in trust within the broader virtual currency ecosystem over the past year. This shift in trust has been quite significant.
As a result of the suffering that the majority of these sector stakeholders have been through, the zeal of regulators has increased as the necessity to safeguard consumers is significantly more than it would normally be.
Although Binance continues to be the trading platform with the highest average daily trading volume, the exchange still receives the most criticism from press members.
The exchange is being accused of assisting in operations related to money laundering and assisting users from countries that are subject to sanctions from using its platform, such as Iran.
This fear, uncertainty, and doubt could be to blame for the rapid opening of investigations by ASIC. This regulatory body wants to cover all its bases before a spread occurs.
Binance has responded to this situation openly and honestly, and there are indications that this will be handled as a temporary setback in the company's operations rather than a major disruption.
