The Australian Securities & Investments Commission (ASIC) has reached a significant legal milestone in a case concerning non-cash crypto payments.
According to an announcement on Friday, the case involving BPS Financial Pty Ltd (BPS) saw Justice Downes of the Federal Court of Australia affirm ASIC’s claims regarding unauthorized operations by the company.
The legal battle began in October 2022 when ASIC accused BPS of making false, misleading, and deceptive representations regarding its Qoin Wallet offerings. The product is a non-cash payment tool that uses a digital asset known as the Qoin token to facilitate payments for customers. The securities watchdog also claimed that BPS violated the country’s Corporations Act as it was not registered under the Australian Financial Services Licence or authorized by a license holder to legally provide such services to customers.
Justice Downes’ ruling, however, confirmed these allegations. The court ruled that the company misled consumers about the Qoin Wallet’s functionalities, registration status, and exchange capabilities.
Unveiling Deceptive Practices
While delivering judgment for the case at the Federal Court of Australia, the judge found that BPS deceived investors into believing that Qoin could be used to purchase goods and services from an “increasing number of Qoin merchants,” when in fact, it was declining.
BPS also stated in their promotional campaigns that users would be able to swap the token for other different cryptocurrencies and even Australian dollars outside the Qoin Wallet. However, in essence, the only exchange that accepted the token before November 2021 was BTX Exchange, which was owned by BPS. The court found that the exchange did not allow users to swap their Qoin for other cryptocurrencies as promised.
ASIC Chair Joe Longo said the win was a significant ruling as the first court outcome against a non-cash payment facility involving crypto. He also disclosed that the ruling should serve as a reminder for crypto service providers to obtain proper licenses and comply with regulatory standards.
ASIC Cracks Down on Crypto Firms
The legal victory underscores ASIC’s ongoing efforts to combat illegal crypto activities in Australia, safeguard investor interests, and ensure the integrity of financial markets.
Last month, ASIC filed lawsuits against three crypto mining firms – NGS Crypto, NGS Digital, and NGS Group – along with their executives Brett Mendham, Ryan Brown, and Mark Ten Caten. These entities were accused of breaching federal regulations by promoting blockchain mining packages with guaranteed 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) before converting them into cryptocurrency.
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