Australia’s markets regulator initiated court action against BPS Financial alleging the company behind crypto asset Qoin ran misleading promotional advertisements, according to a press release.
The Australian Securities and Investments Commission (ASIC) said the advertisements made “false, misleading or deceptive representations” that consumers will be able to exchange Qoin tokens “for other crypto-assets or fiat currency (such as Australian dollars) through independent exchanges” and that there was “an increasing number of merchants” who would accept it, according to the release.
However, “there have been periods of time where it was not possible to exchange Qoin tokens through independent exchanges,” ASIC said. Qoin also gave the impression that its ecosystem was growing even as the number of merchants fell, according to ASIC.
ASIC Deputy Chair Sarah Court said the case is important because it is the first time the organization is saying a crypto asset offering is a financial product, the Sydney Morning Herald reported. ASIC has asked the court to find that Qoin is a financial product that requires a license.
“We believe that more than 79,000 individuals and entities who have been issued with the Qoin Facility may have believed that it was compliant with financial services laws, when ASIC considers it was not,” Court said in the release.
BPS Financial said it “does not agree with the ASIC’s position” and “will be defending the matter,” the Sydney Morning Herald reported. The firm did not respond to a CoinDesk request for comment sent after the close of the Australian working day.
In February 2021, Blockchain Australia (BCA), the leading blockchain industry body in Australia, ejected Qoin from its membership list without making it clear why.
Australia’s markets watchdog has previously stated its key priority was to warn customers about risks involved in crypto. The government has announced it will use “token mapping” as a framework for regulation and the start of a CBDC pilot, even as the industry has called for legislation.
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