The Australian Securities and Investments Commission (ASIC) has commenced civil penalty proceedings against BPS Financial Pty Ltd (BPS) for making allegedly false, misleading, or deceptive representations and unlicenced conduct in respect of the non-cash payment facility, Qoin.
BPS offered retail consumers and business owners access to the Qoin cryptocurrency token and digital wallet since 2020. Qoin was designed to make and accept payment for goods and services and could be exchanged for Australian dollars by a related entity known as Block Trade Exchange Pty Ltd (BTX).
ASIC alleges that the operation of the Qoin payment facility contravened s 911A(5B) of the Corporations Act 2001 (Cth) by carrying on a financial services business without holding a valid Australian Financial Services Licence. Moreover, ASIC alleges that BPS contravened s 12DB(1) of the Australian Securities and Investments Commission Act 2001 (Cth) by making false or misleading representations in regard to marketing and promotion of the Qoin payment facility, such as:
- users who purchase Qoin could exchange the asset for fiat currency through independent exchanges, if and when they chose to
- Qoin tokens could be used to purchase goods and services from an increasing number of merchants
- the Qoin token and wallet were regulated, registered, and/or approved in Australia, and
- the Qoin payment facility and BPS were fully compliant with domestic financial services laws.
ASIC is currently seeking declarations, injunctive relief, pecuniary penalties, corrective advertising, and adverse publicity orders and costs for the alleged contravention. Despite no sector-specific regulation of cryptocurrency in Australia, ASIC is initiating these proceedings to illustrate the application of existing financial services legislation to the asset class, and the regulators push to regulate the risky cryptocurrency practices.