Key Points
- The Australian Federal Court has ruled in favor of ASIC in a case involving BPS Financial Pty Ltd’s unauthorized operations.
- This case highlights ASIC’s ongoing efforts to combat illegal crypto activities and safeguard investor interests.
The Australian Securities and Investments Commission (ASIC) has secured its first victory in a non-cash payment case involving cryptocurrency. The case was against BPS Financial Pty Ltd (BPS), and the Federal Court of Australia upheld ASIC’s claims about the company’s unauthorized operations.
BPS was accused by ASIC in October 2022 of making deceptive representations about its Qoin Wallet offerings. The Qoin Wallet, a non-cash payment tool, uses a digital asset called the Qoin token to facilitate payments for customers. ASIC also claimed that BPS violated the Corporations Act by operating without registration under the Australian Financial Services Licence or authorization from a license holder.
Confirmation of Deceptive Practices
Justice Downes’ ruling confirmed these allegations. The court found that BPS misled consumers about the Qoin Wallet’s functionalities, registration status, and exchange capabilities.
The judge found that BPS deceived investors into believing that Qoin could be used to purchase goods and services from a growing number of Qoin merchants. However, the number was actually declining. BPS had also claimed that users could exchange the token for other cryptocurrencies and Australian dollars outside the Qoin Wallet. In reality, the only exchange accepting the token before November 2021 was BTX Exchange, which was owned by BPS, and it did not allow users to exchange their Qoin for other cryptocurrencies as promised.
ASIC Chair Joe Longo described the ruling as significant. It is the first court outcome against a non-cash payment facility involving cryptocurrency. Longo also stated that the ruling should remind crypto service providers to obtain proper licenses and comply with regulatory standards.
ASIC’s Fight Against Illegal Crypto Activities
This legal victory highlights ASIC’s ongoing efforts to combat illegal cryptocurrency activities in Australia, protect investor interests, and maintain the integrity of financial markets.
In the previous 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.
