Australian regulator secures $9.7 million penalty against BPS Financial over Qoin Wallet violations

The Australian Securities and Investments Commission (ASIC) has successfully secured a significant penalty of $9.7 million against BPS Financial Pty Ltd (BPS) for making false and misleading statements regarding its digital currency product, the Qoin Wallet. This decisive legal action underscores the regulator’s commitment to ensuring transparency and compliance within the burgeoning digital asset sector.

BPS Financial, the promoter of the Qoin digital token and the associated Qoin Wallet, was found by the Federal Court to have engaged in systematic misleading or deceptive conduct across various promotional materials and online platforms. The core violations centered on the liquidity and usability of the Qoin token, which was marketed as a stable alternative currency for businesses.

ASIC’s investigation revealed that BPS significantly misrepresented the ease with which users could convert their Qoin tokens into Australian dollars (fiat currency). Promotional materials often suggested high liquidity and a simple exit mechanism, leading consumers to believe the token was easily interchangeable with traditional currency. Evidence showed that the mechanisms for exiting the Qoin ecosystem were limited and heavily restricted, making the token far less liquid than advertised. The Court concluded that BPS failed to provide adequate disclosure concerning the true financial viability and regulatory standing of the Qoin scheme.

The ruling emphasizes that companies offering digital financial products must provide accurate and balanced information to the public, particularly regarding the inherent risks and limitations associated with novel investment schemes. The $9.7 million penalty serves as a powerful deterrent against similar breaches of corporate responsibility and disclosure obligations in the financial technology space.

In addition to the financial penalty, the court ordered BPS Financial to implement rigorous compliance training, appoint an independent compliance monitor for a specified period, and issue corrective disclosures to consumers who invested in the Qoin Wallet based on the misleading information.

Source: Australian regulator secures $9.7 million penalty against BPS Financial over Qoin Wallet violations