The Australian Securities and Investments Commission (ASIC) has emerged victorious in its legal battle against BPS Financial, accusing the company of fraudulent activities related to its non-cash payment system powered by the Qoin token. The Federal Court of Australia found BPS guilty of making four false claims, including assertions that Qoin is government registered or approved, subject to legal complaints, freely exchangeable for other cryptocurrencies or fiat currencies, and accepted by an expanding network of merchants.
The court ruled that BPS violated both the Corporations Act and the Australian Securities and Investments Commission Act. It has instructed the involved parties to collaborate on determining the next course of action, which could involve penalties, ahead of a subsequent hearing later this year.
Qoin was introduced by BPS in January 2020, with its ecosystem encompassing tokens, blockchain technology, wallets, and payment facilities, according to the company's website. As of June 2021, Qoin reportedly boasted over 100,000 users and 36,000 registered merchants, with 394 million Qoin tokens in circulation. However, in November 2021, a class-action lawsuit alleging deception, non-compliance, and involvement in pyramid schemes was filed against BPS, with the case apparently ongoing. Additionally, Qoin faced expulsion from the Australian Blockchain Industry Association in February 2021.
ASIC initiated legal proceedings against BPS in October 2022, and the recent court decision marks a significant milestone as the first ruling against a non-cash payment facility linked to cryptocurrencies. ASIC Chairman Joe Longo emphasized the regulatory body's commitment to clarifying the regulatory status of crypto-related products and the necessity for providers to obtain appropriate licenses. ASIC's legal actions in the crypto sphere have included a lawsuit against financial products comparison website Finder.com in December 2022, which alleged the offering of unlicensed cryptocurrency yield products. Although ASIC's case was unsuccessful in March, it is currently appealing the decision.
Furthermore, in a separate case involving ASIC and cryptocurrency lender Block Earner, the court delineated that managed crypto products offering yields necessitate licensing. However, decentralized finance (DeFi) products facilitated through entities may not require such licenses, highlighting the complexities surrounding regulatory oversight in the evolving landscape of digital assets.
