ASIC Wins Case Against BPS Financial Over Misleading Qoin Token Practices
Summary:
The Australian Securities & Investment Commission (ASIC) has secured a court victory against BPS Financial over allegations of deceptive practices relating to its non-cash payment facility using the Qoin token. The Federal Court of Australia found that BPS made false claims about Qoin, including governmental registration or approval, legal compliance, and its acceptance by a wide network of merchants. The case is considered the first successful ruling against a non-cash payment facility involving cryptocurrency. Furthermore, ASIC has initiated other lawsuits tackling non-licensed cryptocurrency entities.
In a legal battle with BPS Financial, the Australian Securities & Investment Commission (ASIC) has emerged victorious, following allegations surrounding BPS's misleading activities related to its non-cash payment system, supported by the Qoin token. The Federal Court of Australia's judgement points to four false representations made by BPS. Specifically, the claims included governmental oversight or approval of Qoin, legal compliance, its ready convertibility into other cryptocurrencies or fiat money, and its acceptance by an increasing number of merchants. The court confirmed that BPS's actions were in breach of the Corporations Act and the Australian Securities and Investments Commission Act. The parties are now required to deliberate over future proceedings before another hearing later this year that could potentially impose penalties.
BPS unveiled Qoin in January 2020, forming part of an ecosystem, featuring the token itself, a blockchain, a wallet and a "payment facility". Reportedly, over 36,000 merchants have registered and it boasts more than 100,000 users. As of June 2021, 394 million Qoin tokens were circulation, as stated on their website.
In November 2021, a class action suit was lodged against BPS, citing deceit, regulatory nonadherence and operation of a pyramid scheme. The case is believed to be ongoing. In an unrelated incident, Qoin was expelled from the Blockchain Australia industry association in February 2021.
The proceedings against BPS by ASIC commenced in October 2022. It is believed to be the first favourable ruling against a non-cash payment facility involving cryptocurrency. Joe Longo, ASIC Chair, stated that the regulator has acted against multiple crypto asset firms aiming to elucidate the nature of a regulated product and when it's mandatory for the provider to hold a license.
Additionally, ASIC brought a lawsuit against financial product comparison site Finder.com in December 2022, alleging it was providing a licensure-requiring cryptocurrency yield-bearing product. Unfortunately for ASIC, the judgement was against it in March, which ASIC is now challenging. In relation to a case by ASIC against crypto lender Block Earner, the judgement indicated that managed crypto products offering a yield require a license, although those facilitating decentralized finance (DeFi) access don't necessarily need one.
Published At
5/3/2024 9:54:06 PM
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