- Binance Australia derivatives traders alleged that the exchange refrained from informing them of the reason behind the liquidation.
- The crypto exchange announced that they are in the process of compensating the users for their losses.
- Binance is already fighting the SEC in the US, as the agency on Thursday objected to its acquisition of Voyager.
Binance has been facing troubles on all fronts ranging from users to regulators, for the last few days. And if that was not enough, the world’s biggest cryptocurrency exchange caused more problems for itself on Thursday after making a huge blunder.
Binance Australia makes a mistake
Earlier on February 23, reports of Binance liquidating all derivative positions of its Australian arm began emerging. Users complained of all their positions being liquidated without any forewarning and were only informed post hoc. The cryptocurrency exchange issued a notification to the affected users stating,
“If you wish to regain access to the Binance Australia Derivatives trading platform and services you will need to provide new information or evidence of how you meet the requirements to be classified as a Wholesale Investor.”
This was later confirmed by Binance itself as well. The company clarified that the Binance Australia team noted a couple of its users in the country were incorrectly classified as “Wholesale Investors” on the platform.
The exchange went on to state that per the Australian regulation, Binance was mandated to inform such users and close any of their derivative positions immediately.
The company further said that all impacted users had been informed and that they would be completely compensated for the losses incurred while trading derivatives on the platform. No further information was provided by Binance at the time of writing.
This was not the first time Binance Australia users were taken by surprise, as the exchange pulled a similar stunt back in September 2021. The platform had suddenly issued a 90-day notice to its derivative users to exit their positions as the exchange was set to shut down their service.
Binance takes another hit from the SEC
Binance had already been facing the brunt of the regulatory agency for the last couple of days owing to the Paxos-BUSD debacle. Following a Wells notice from the Securities and Exchange Commission (SEC), Paxos resorted to terminating the issuance of the stablecoin Binance USD (BUSD).
Now on Thursday, the SEC took another step in impeding Binance’s plans as the agency, along with the New York Department of Financial Services (NYDFS), objected to the acquisition of defunct crypto exchnage Voyager’s assets. The $1 billion agreement between Binance and Voyager was signed in December last year. However, the SEC counsel, Therese Scheuer, in the filing stated,
“Regulatory actions, whether involving Voyager, Binance.US or both, could render the transactions in the plan impossible to consummate, thus making the plan unfeasible.”
Scheuer also alleged that the acquisition could actually just be a “$20 million sale” of Voyager’s customer list. As reported by FXStreet, Voyager struck back at the regulators stating that the acquisition might be its best chance of retrieving lost funds.
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