ASIC fires industry warning shot as it sues BPS Financial over crypto promo

Australia’s financial regulator has issued a stark warning to Australian crypto asset providers amid launching civil proceedings against Australian firm BPS Financial Pty Ltd (BPS) over “misleading” representations concerning its Qoin crypto token. 

In an Oct. 25 announcement, the Australian Securities and Investments Commission (ASIC) said it has commenced civil penalty proceedings against BPS Financial for making “false, misleading or deceptive representations” to its 79,000 users about its crypto token Qoin.

It alleges the company engaged in “unlicensed conduct” relating to Qoin, a digital currency launched in Oct. 2019 which allows participating merchants to accept as payment for goods and services.

ASIC Deputy Chair 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 promotion of crypto-asset financial products that could harm consumers – this is a key priority for ASIC.”

She further explained its crucially important that consumers and investors are “provided with honest and accurate information,” because “Crypto-assets are highly volatile, inherently risky, and complex. Every crypto-asset is different, often making it difficult to compare with each other – or anything else.”

Court said they were particularly concerned over 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 an increasing number of merchants registered with BPS.

“We believe the more than 79,000 individuals and entities who have been issued with the Qoin Facility may have believed that it was compliant with financial services laws, when ASIC considers it was not.”

 BPS has denied all wrongdoing in an Oct. 25 statement on the Qoin website, saying they disagree with “ASIC’s position” and “will be defending the matter.”

“Before it started, BPS consulted with 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 to.” 

ASIC is seeking declarations, pecuniary penalties, injunctions and adverse publicity orders from the Court, but the date for the first case management hearing has not been scheduled.

Related: 1M Aussies will enter crypto over the next 12 months — Swyftx survey

The Australian regulator has ramped up scrutiny over the crypto sector over the last few months. In August, ASIC chief Joe Longo raised the alarm over the number of people that invested 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 corporate regulator isn’t the first to pursue legal action against BPS.

In late 2021, Queensland-based law firm Salerno Law accused BPS of engaging in misleading and deceptive conduct and sought $100 million in damages on behalf of merchants, investors and holders who suffered losses after acquiring the Qoin utility token.

Cointelegraph reached out to BPS for further comment about the case, but did not receive a reply before publication. 

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