As a crypto investor with some experience in the Australian market, I find this ruling by the Australian Securities and Investment Commission (ASIC) against BPS Financial Pty Ltd (BPS) for their Qoin Facility a significant development. It’s crucial for us, as investors, to understand the implications of such regulatory actions.
According to recent developments, the Australian Securities and Investment Commission (ASIC) secured its initial victory in a legal dispute over cryptocurrencies that did not involve cash transactions. The court’s decision, as documented, supported ASIC partially in its lawsuit against BPS Financial Pty Ltd (BPS).
“Qoin Scheme” Earns $26 Million In Sales
In the year 2022, The Australian Securities and Investments Commission (ASIC) began civil proceedings against BPS for suspected misrepresentations, falsehoods, or deceit in their advertising. Additionally, they were accused of operating without a necessary license using a non-cash payment system that dealt with a crypto asset token.
In 2020, the Australian regulatory body identified the Qoin Facility as a non-cash payment system set up by the company. The Qoin scheme encompassed three key components for me as an investor: the Qoin tokens themselves, the Qoin Wallet where I could store them, and the underlying technology powering it all – a distributed digital ledger that relied on blockchain technology to function effectively.
Additionally, ASIC claimed that BPS marketed their tokens to both retail consumers and business proprietors, positioning them as a means of payment for goods and services provided by Qoin Merchants.
Despite this, the Qoin tokens could only be traded on the BTX Exchange, which is run by Block Trade Exchange Pty Ltd (BTX). This exchange appeared to permit trading of Qoin tokens solely for Australian dollars. Over the course of time, it was reportedly imposed certain limitations that curbed the possibility of exchanging the token.
Based on the announcement, the Qoin Wallet counted over 93,000 users as of September 2022. Furthermore, it generated approximately $26.5 million, or AU$40 million, through Qoin token sales.
Court Rules In Favor Of Watchdog
On May 3, 2024, I, as an analyst, can report that the Australian Federal Court reached a verdict against BPS. The company was held responsible for most of the allegations brought forth by ASIC (Australian Securities and Investments Commission). According to Judge J Downes’ ruling, BPS had acted unlawfully when providing the “Qoin Wallet,” a payment system utilizing a crypto-asset token, without proper licensing.
During the last ten months of 2020, BPS allegedly violated the Corporations Act according to Judge Downes since they didn’t possess an Australian Financial Services License. Consequently, they were prohibited from “dispensing or recommending the Qoin Wallet” within that timeframe.
Additionally, the court determined that the corporation had employed deceptive marketing tactics regarding the Qoin Wallet. The company’s misrepresentations included assertions that the wallet was legally authorized and could be utilized to buy merchandise and services from a growing roster of Qoin Merchants, despite evidence to the contrary.
As a crypto investor, I’ve come across some important information regarding Qoin tokens. The court discovered that prior to November 2021, only BTX exchange allowed the trading of Qoin tokens. This finding goes against statements suggesting that Qoin could be exchanged for other crypto assets or Australian dollars (AUD) on various platforms.
Clearer Regulatory Framework For Crypto?
Expert: The ruling by the Court marking the first judgment against a non-cash payment facility utilizing cryptocurrency, as asserted by ASIC Chair Joe Longo, carries great significance. Nevertheless, the Court did not concur with all of ASIC’s objections against BPS.
The judicial ruling, as stated in the formal record, refuted the regulator’s stance that the Qoin Wallet, Qoin Blockchain, and Qoin Facility represented a singular scheme.
In contrast to ASIC’s arguments, the Qoin Blockchain and the method for acquiring Qoin, in addition to the registration process for Qoin Merchants using their wallets, do not encompass or constitute the actual mechanism enabling users to make non-cash payments.
The Court’s decision not to approve the regulator’s classification of blockchain technology as a financial product under Australian law is a significant one. According to the chair of ASIC (Australian Securities and Investments Commission), the regulatory body has initiated several enforcement actions against crypto asset businesses to provide clarity on what constitutes a regulated product and when a license is required.
Lastly, Longo added that the enforcements are meant as a message to the crypto community:
The outcomes of these investigations serve as a reminder to the cryptocurrency sector that their offerings will remain under the watchful eye of ASIC. Consumers’ safety and regulatory compliance are our top priorities.
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2024-05-07 09:35