The Australian Securities and Investments Commission (ASIC) has successfully secured a $9.3 million civil penalty against BPS Financial Pty Ltd in the Federal Court. The substantial fine was imposed after the Court found BPS Financial engaged in widespread misleading and deceptive conduct concerning its Qoin digital token and the associated Qoin Wallet platform.
ASIC commenced legal action arguing that BPS Financial made false or misleading representations through various channels, including its website, social media, and promotional materials. The core of the misconduct related to the liquidity of the Qoin token. BPS Financial falsely represented that Qoin tokens could be easily converted into fiat currency, particularly Australian dollars, suggesting a high level of tradability and cash-out capability. In reality, conversion mechanisms were highly restrictive, often leaving token holders unable to liquidate their investments as advertised.
Further findings established that BPS misled consumers regarding the regulatory oversight and security of the Qoin Wallet. BPS implied that the wallet was compliant with financial services laws, regulated by financial authorities, and offered guarantees similar to those provided by traditional banking institutions, none of which was true.
ASIC stated that the record penalty is crucial for setting a precedent in the digital asset space, emphasizing that promoters of cryptocurrency products cannot mislead retail consumers about the nature, risk, or liquidity of their offerings. The Court’s decision reinforces that existing consumer protection laws against misleading and deceptive conduct apply rigorously to crypto asset providers. In addition to the monetary penalty, BPS Financial has been ordered to publish corrective statements outlining the Court’s findings and the truth regarding the Qoin token’s liquidity and regulatory status.
Source: ASIC wins $9.3M penalty against BPS Financial over misleading Qoin Wallet
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