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Australia’s Financial Watchdog Cracks Down on ‘Misleading or Deceptive’ ICOs

Last Updated March 4, 2021 5:07 PM
Samburaj Das
Last Updated March 4, 2021 5:07 PM

Australia’s financial regulator and watchdog is turning up its scrutiny on fraudulent practices in the initial coin offering (ICO) space.

The Australian Securities and Investments Commission (ASIC) has forced “some” ICO issuers to modify or halt their coin offerings altogether after the regulator sent inquires scrutinizing their marketing practices, the ASIC said in a statement  on Tuesday. The regulator did not disclose the details of the coin offerings under scrutiny.

“ASIC is issuing inquiries to ICO issuers and their advisers where we identify conduct or statements that may be misleading or deceptive,” the regulator revealed. “As a result of our inquiries, some issuers have halted their ICO or have indicated the ICO structure will be modified.”

Furthermore, the ASIC also confirmed it had sent out inquiries to operators suspected of ‘potentially unlicensed conduct’.

Without naming the operator or the ICO, the ASIC pointed to one case as an example wherein it ‘identified fundamental concerns with the structure of an ICO, the status of the offeror and the disclosure of its whitepaper.’ The regulator determined that the ICO offering was an ‘unregulated managed investment scheme’ that was in breach of laws, in addition to ‘potentially misleading statements’ from its whitepaper. The ASIC halted the offering before it took off.

ASIC commissioner John Price said in statements:

If you are acting with someone else’s money, or selling something to someone, you have obligations. Regardless of the structure of the ICO, there is one law that will always apply: you cannot make misleading or deceptive statements about the product. This is going to be a key focus for us as this sector develops.

The developments come after the ASIC confirmed it would update guidelines on its information sheet focusing on ICOs and cryptocurrencies last month. Stamping out deceptive practices is, in particular, “going to be a key focus for us going forward” Price said in April.

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