- Australia’s key financial regulator, ASIC, has won a landmark case against BPS Financial, a crypto service provider operating since the early 2020s.
- The court found that BPS ran its product, Qoin Wallet, without a financial services license.
- Additionally, the judge accused BPS of intentionally misleading customers by implying the company was registered and that there was substantial secondary liquidity for the Qoin token, when there was not.
- Penalties for the company are set to be handed down later this year.
The global crackdown on cryptocurrency enforcement has made its way to Australia, with the nation’s lead financial regulator winning its first court case versus a “non-cash payment facility involving crypto assets”. However, unlike some more controversial ongoing lawsuits – particularly those conducted by the SEC – enforcement from ASIC in this instance appears very warranted.
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The allegations of flaunting Australian financial regulations were made against BPS, the company that offered “Qoin Wallet” throughout the early 2020s. This wallet was intended to house the QOIN token, an obscure altcoin with very little secondary liquidity. The trial unearthed several damning details about the actions of BPS, which were in clear violation of the rulebook.
The presiding Judge, Justice Downes, deemed the company operated for several years without holding an Australian Financial Services License, therefore “contravening the Corporations Act”. But to make matters worse, the court ruled that BPS acted in an intentionally duplicitous manner in marketing its product to customers. The company acted as though its native token, Qoin, could be used as a medium of exchange at a large number of merchants – when in fact, essentially no store would accept the coin. Even more egregious, the only exchange that offered the redemption of Qoin tokens was BTX Exchange, a platform heavily associated with BPS.
So while the company may not have directly orchestrated a rug pull, the court found them in breach of several important laws.
The head of ASIC, Joe Longo, said that the enforcement body would continue to work within the industry to “clarify what is a regulated product and when the provider needs a license.”
He went on to say:
Crypto assets are highly volatile, inherently risky, and complex. This makes it critically important that providers have the appropriate licences and authorisations, and that investors are provided with clear and accurate information. This case is an important reminder that many crypto products are financial products and that providers need to hold a licence.
Joe Longo, ASIC chair
Source:
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