The Australian Securities and Investments Commission (ASIC) has reached a major legal milestone in a case involving non-cash cryptocurrency payments.
In a case involving BPS Financial Pty Ltd (BPS), Justice Downes of the Federal Court of Australia confirmed ASIC’s claims of unauthorized operations by the company, according to an announcement on Friday.
The legal battle began in October 2022 when ASIC accused BPS of making false, misleading and deceptive statements in relation to its Qoin Wallet product. The product is a non-cash payment tool that facilitates payments from customers using digital assets known as Qoin tokens. The securities watchdog also alleged BPS breached the country’s corporate laws because it was not registered under an Australian financial services license or authorized by a license holder to lawfully provide such services to customers.
But Judge Downes’ ruling confirmed this claim. The court ruled that the company misled consumers about Qoin Wallet’s features, registration status, and exchange features.
Disclosure of Deceptive Practices
While adjudicating the case in the Australian Federal Court, the judge found that BPS had deceived investors into believing they could use Qoin to buy goods and services from a “growing number of Qoin merchants”.
BPS also stated in its promotional campaign that users can exchange tokens for other cryptocurrencies and even Australian dollars outside of the Qoin wallet. However, essentially the only exchange that accepted the token before November 2021 was the BTX exchange, which is owned by BPS. True to its promise, the court ruled that the exchange does not allow users to exchange Qoin for other cryptocurrencies.
ASIC Chairman Joe Longo said the victory was an important ruling as it was the first court result for a non-cash payment facility involving cryptocurrencies. He also said the ruling should serve as a reminder for cryptocurrency service providers to obtain appropriate licenses and comply with regulatory standards.
ASIC cracks down on crypto companies
This legal victory highlights ASIC’s ongoing efforts to combat illegal cryptocurrency activity in Australia, protect investor interests and ensure the integrity of financial markets.
Last month, ASIC filed a lawsuit against three cryptocurrency mining companies – NGS Crypto, NGS Digital and NGS Group – and their executives Brett Mendham, Ryan Brown and Mark Ten Caten. The companies were accused of violating federal regulations by promoting blockchain mining packages that promised returns to Australian investors. ASIC alleged that these investment schemes encouraged the transfer of funds from regulated superannuation funds to self-managed superannuation funds (SMSFs) and then conversion to cryptocurrencies.
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