ASIC fires industry warning shots as it sues BPS Financial over crypto campaign
Australia’s financial regulator has issued a strong warning to Australian crypto-asset providers amid launching civil action against Australian firm BPS Financial Pty Ltd (BPS) over “misleading” representations regarding its Qoin crypto-token.
In an announcement on October 25, the Australian Securities and Investments Commission (ASIC) said it has commenced civil criminal proceedings against BPS Financial for making “false, misleading or deceptive representations” to its 79,000 users about the crypto token Qoin.
It is alleged that the company engaged in “unlicensed conduct” related to Qoin, a digital currency launched in October 2019 that allows participating merchants to accept as payment for goods and services.
ASIC Deputy Commissioner Sarah Court said this case should serve as a warning to all crypto issuers that ASIC is monitoring the crypto market for misconduct.
“Where it falls within our remit, ASIC will take targeted action against unlicensed conduct and misleading marketing of crypto-asset financial products that could harm consumers – this is a key priority for ASIC.”
She further explained that it is crucially important that consumers and investors are “provided with honest and accurate information”, because “Crypto-assets are highly volatile, inherently risky and complex. Each crypto-asset is different, which often makes it difficult to compare with each other – or something else.”
The court said it was particularly concerned by BPS Financial’s alleged misrepresentation that the Qoin facility is regulated in Australia and the token can be used to purchase goods and services from a growing number of merchants registered with BPS.
“We believe the more than 79,000 individuals and entities issued the Qoin facility may have believed it was compliant with financial services laws, when ASIC believes it was not.”
The BPS has denied any wrongdoing in a statement on October 25 on the Qoin website, saying it disagrees with “ASIC’s position” and “will defend the matter.”
“Before it started, BPS consulted ASIC in late 2019 regarding the structure of the Qoi project and did so again in early 2021. BPS will keep the community updated as it is able.”
ASIC is seeking declarations, monetary penalties, injunctions and adverse publicity orders from the court, but the date for the first proceedings has not been set.
Related: 1M Aussies to enter crypto in next 12 months – Swyftx survey
The Australian regulator has increased its scrutiny of the crypto sector in recent months. In August, ASIC chief Joe Longo raised the alarm over the number of people investing in “unregulated, volatile” crypto assets during the COVID-19 crisis.
At the time, he said considering there are “limited protections” for investors, the lack of understanding among retail investors makes “a strong case for regulating crypto assets to better protect investors.”
The business regulator is not the first to take legal action against BPS.
In late 2021, Queensland-based law firm Salerno Law accused BPS of engaging in misleading and deceptive conduct and demanded $100 million in damages on behalf of sellers, investors and holders who suffered losses after acquiring the Qoin tool.
Cointelegraph contacted the BPS for further comment on the matter, but did not receive a response prior to publication.
