The Australian Securities & Investment Commission (ASIC) has emerged victorious in a legal battle against BPS Financial. The firm has been accused of engaging in deceptive practices related to its non-cash payment system, which is powered by the Qoin token.
The Federal Court of Australia has determined that BPS Financial made four false claims regarding Qoin. Specifically, the firm falsely asserted that Qoin was registered or approved by the government, compliant with legal regulations, easily exchangeable for other cryptocurrencies or fiat currencies, and accepted by a growing network of merchants.
The court ruling stated that BPS Financial violated both the Corporations Act and the Australian Securities and Investments Commission Act. As a result, the court has ordered the parties involved to hold discussions regarding the next steps to be taken before an additional hearing later this year, which could potentially result in penalties.
BPS Financial introduced Qoin in January 2020. According to the company’s website, the Qoin ecosystem consists of the Qoin token, blockchain technology, a digital wallet, and a payment system. The website also claims that Qoin has over 100,000 users, 36,000 registered merchants, and as of June 2021, there were 394 million Qoin tokens in circulation.
In November 2021, a class action lawsuit was filed against BPS Financial, accusing the company of deception, noncompliance with regulations, and operating as a pyramid scheme. This case appears to still be ongoing. Furthermore, Qoin was expelled from the Blockchain Australia industry association in February 2021.
ASIC initiated legal proceedings against BPS Financial in October 2022. In its official statement, ASIC highlighted that this court decision marks the first ruling against a non-cash payment system involving cryptocurrency. Joe Longo, the Chair of ASIC, expressed satisfaction with the court’s decision.
In a separate case, ASIC sued financial product comparison website Finder.com in December 2022 for offering an unlicensed cryptocurrency yield-bearing product. However, the court ruled against ASIC in March, and ASIC is currently appealing this decision.
Additionally, in a case brought by ASIC against crypto lender Block Earner, the court ruled that managed crypto products that generate yield require a license. However, products that act as intermediaries to provide access to decentralized finance (DeFi) may not require a license.
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