An Australian Federal Court recently ruled in favor of the Australian Securities and Investments Commission (ASIC) against an unlicensed crypto platform that misled customers. The court found that a Gold Coast crypto promoter, BPS Financial, had broken the law by promoting an unlicensed crypto wallet called the ‘Qoin Wallet’ which used a crypto-asset token called ‘Qoin.’ ASIC Chair Joe Longo emphasized the importance of authorized licenses in the highly volatile and risky world of crypto assets and stated that the commission has been taking enforcement actions against unlicensed crypto businesses.
Justice Downes found that BPS Financial had breached the Corporations Act by not holding an Australian Financial Services license and had misled customers by making false representations about the Qoin Wallet. Qoin had launched in Australia in early 2020, promising significant returns to investors and claiming that the Qoin Wallet was officially registered, which was not the case. Business owners raised concerns about the future of the digital currency and there were worries about misinformation and the inability for some to cash out. Australia’s corporate regulator, ASIC, launched court action alleging that advertisements promoting Qoin had misled consumers by giving them false impressions.
Over 79,000 individuals and entities who bought Qoin may have believed that the product was compliant with financial services laws. However, in 2022, ASIC alleged that this was not the case and lodged civil penalty proceedings in the Federal Court against BPS Financial. ASIC deputy chair Sarah Court stated that this case was significant as it was the first time the commission had taken court proceedings alleging that a crypto asset offering, in this case the Qoin facility, was a financial product being offered. The court’s ruling highlights the importance of proper licenses and accurate information in the crypto space.
The ASIC’s actions against BPS Financial and the controversial Qoin cryptocurrency are part of a broader effort by regulators to crack down on unlicensed crypto businesses and protect consumers from misleading practices in the industry. ASIC Chair Joe Longo’s warning about the risks of crypto assets and the need for proper licensing underscores the commission’s commitment to upholding financial regulations in the rapidly evolving crypto market. The ruling in favor of ASIC in the Federal Court sets a precedent for holding companies accountable for engaging in unlicensed activities and misleading consumers about the nature of their products.
The case of BPS Financial and the Qoin cryptocurrency serves as a cautionary tale for both businesses and investors operating in the crypto space. The court’s findings of breaches of the Corporations Act and misleading representations highlight the potential legal consequences for failing to comply with licensing requirements and providing accurate information to customers. As the crypto industry continues to grow and attract more attention, it is crucial for stakeholders to ensure compliance with regulatory frameworks and transparency in their operations to prevent further instances of fraud or deception in the market. The ASIC’s enforcement actions against unlicensed crypto businesses demonstrate the commission’s commitment to maintaining integrity and trust in Australia’s financial system.
