On February 23rd, news broke that Binance had unexpectedly suspended futures services for some of its Australian users, causing a stir in the cryptocurrency community on Twitter. According to reports from users on the platform, Binance Australia had sent out notifications informing them that their derivative trading accounts were being closed with immediate effect and their open orders were being liquidated.
holy fk binance just liq’d all AU perp positions
AAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAA pic.twitter.com/ayV3GmzwRb— illiquidity providoooor (@skyquake_1) February 23, 2023
Screenshots of the notifications circulated on Twitter, indicating that Binance Australia had decided to close users’ futures positions and accounts. The exchange required those who wished to reopen their futures accounts to provide new identification proving they were Professional Investors in accordance with Australian regulations. While other features such as buying and selling cryptocurrencies on Binance Australia remained operational, some users reported receiving the notifications rather late, between 10-11 PM local time, which caused some traders who had gone to bed early to miss them. Additionally, the notifications took immediate effect, preventing many users from intervening and leading to liquidation of their orders.
We have already contacted all impacted users and will fully compensate them for their losses incurred while trading derivatives on Binance.
— Binance (@binance) February 23, 2023
The sudden move by Binance has sparked outrage from some investors who were caught off guard. On the same day, the crypto market experienced a short-term dump with significant sell volume, leading to speculation that this was a direct result of Binance Australia liquidating users’ orders. In an official statement, Binance claimed that it had identified a “small number” of Australian users who had been misclassified as Professional Investors, requiring the closure of their accounts to avoid violating the law. The exchange confirmed that it had contacted all affected users and pledged to fully compensate them for any losses they incurred while trading derivatives on Binance.
The incident has raised concerns among investors in Australia and may have implications for Binance’s reputation in the country. It also underscores the importance of regulatory compliance for cryptocurrency exchanges operating in different jurisdictions. As the cryptocurrency market continues to grow and gain wider adoption, exchanges must be mindful of the various regulations in place to avoid similar issues.
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