ASIC searches Binance Australia offices as part of derivatives probe

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The financial markets watchdog has searched Binance’s offices in Australia as governments around the world turn up the heat on the biggest cryptocurrency exchange.

The Australian Securities and Investments Commission conducted searches at several Binance Australia locations on Tuesday, people with knowledge of the matter said, asking not to be identified discussing private information. The action was part of an investigation into its now-defunct local derivatives business, according to the people.

Binance founder Changpeng ‘CZ’ Zhao acknowledged on Wednesday that “external pressure” has hurt the company.Credit: Zed Jameson/Bloomberg

Regulatory crackdowns on Binance from Australia to Europe and the US are becoming a drag on its business. The heightened scrutiny has also prompted banking partners such as Westpac to drop Binance, limiting clients’ ability to deposit and withdraw fiat money on the exchange.

At a Twitter Spaces on Wednesday, Binance founder Changpeng ‘CZ’ Zhao acknowledged that “external pressure” has hurt the company. “Many of those things are outside of our control, but short term they have negative impacts on our business,” he said.

The platform’s global share of crypto spot trading fell for a fourth consecutive month in June, reaching a 10-month low of 42 per cent, according to a report from CCData on Wednesday. Binance’s derivatives market share also dropped.

ASIC’s review of the derivatives operation includes Binance Australia’s classification of retail and wholesale clients. The company said in April it would wind down the local derivatives exchange while keeping the spot platform open. The firm previously said it had closed the derivatives positions of some Australian users because they were incorrectly classified as wholesale investors.

A spokesperson for ASIC, which in April cancelled Binance Australia’s licence for its derivatives operation, said that “we are unable to confirm or deny any operational detail such as possible searches” and added that the regulator’s review of the company “is ongoing.”

Binance said that it’s “cooperating with local authorities” and “is focused on meeting local regulatory standards in order to serve our users in Australia in a fully compliant manner.”

The company’s Australia platform has been cut off from a key local currency withdrawal route after its local payments partner withdrew support. In Europe, Paysafe will no longer support bank transfers of euros to and from Binance via the Single Euro Payments Area network from September 25. Paysafe has also pulled support for British pound transactions on Binance.

Last month, authorities in France visited Binance there. French officials are investigating the alleged illegal provision of digital-asset services and acts of aggravated money laundering. Binance has said it abides by all laws in France and in every other market where it operates.

The US Securities & Exchange Commission in June accused Binance and Zhao of mishandling customer funds, misleading investors and regulators, and breaking securities rules.

Binance has called the SEC action “disappointing” and said that it intends to defend its platform “vigorously.” Zhao and Binance also face a lawsuit from the Commodity Futures Trading Commission.

Bloomberg

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