ASIC has made a move to stop several proposed ICOs targeting retail investors. The commission accuses them of being misleading, using deceptive statements and lacking Australian licenses.
The Australian Securities and Investments Commission (ASIC) has issued an official statement showing the actions it has taken against several “misleading Initial Coin Offerings (ICOs) and crypto asset funds” that were targeting local retail investors. The financial regulator states it has put the said ICOs on hold until they comply with the applicable legal requirements.
Tightening Regulatory Strings Down Under
ASIC also stopped a crypto asset managed investment scheme from issuing a product disclosure statement (PDS). The commission was empowered to act against prospective ICOs in April under consumer law as long as they have proof of deceptive and misleading conduct. The commission identified the following problems as being consistent with the offending ICOs:
- Use of deceptive or misleading statements in their marketing materials
- Running an unlawful unregistered managed investment scheme (MIS)
- Lack of licenses from Australian Financial services
The Australian Securities and Investments Commission (ASIC)’s John Price says in the statement:
“If you raise money from the public, you have important legal obligations. It is the legal substance of your offer–not what it is called–that matters. You should not simply assume that using an ICO structure allows you to ignore key protections there for the investing public and you should always ensure disclosure about your offer is complete and accurate.”
Focus on Scammy ICOs
Further action taken by the financial regulator includes prohibiting ICOs from raising capital in five separate issues since April 2018 for failing to indicate what investor protection measures they had put in place. They have put the five affected ICOs on hold until they put in place new structures in line with the requirements mandated by the commission. The statement by ASIC justified their action saying “ICOs are speculative, high risk and largely experimental. The statement further said:
“ICOs use the internet to raise money, but they are not the same as crowd-sourced funding which is regulated under Australian law and offers basic investor protections […] as a result, some projects may take years before they become commercially viable, if at all. A large number of ICOs fail or do not increase in value.”
ASIC commissioner John Price has said going forward; the commission will focus its lenses especially on ICOs. He, however, was quick to reassure that the regulator will approach crypto space and new financial innovations with an open mind but not at the expense of existing consumer protection policies.