Australia’s financial watchdog swoops down on ‘misleading or deceptive’ ICOs
The commission is making good on its promise to hold cryptocurrency companies to its legal standards.
Early last month, Australia issued legislative guidelines for cryptocurrency exchanges in the country. This month, the Australian Securities & Investments Commission (ASIC) released an updated set of guidelines for initial coin offerings (ICOs) and cryptocurrencies.
“Australian law prohibits misleading or deceptive conduct in a range of circumstances, including in trade or commerce, in connection with financial services, and in relation to a financial product. Care should be taken to ensure promotional communications about any crypto-currency or ICO do not mislead or deceive potential consumers and do not contain false information,” the release stated. “It is a serious breach of the Australian law to undertake misleading or deceptive conduct.”
To show just how serious the commission is, the financial watchdog followed through with these guidelines by cracking down on ICO’s, forcing some to freeze their token sales.
“These offers can involve significant risks for investors that are often not disclosed or well understood,” the ASIC wrote in a statement. “ASIC is issuing inquiries to ICO issuers and their advisers where we identify conduct or statements that may be misleading or deceptive. This is in addition to our inquiries where we identify potentially unlicensed conduct. As a result of our inquiries, some issuers have halted their ICO or have indicated the ICO structure will be modified.”
The ASIC, which was granted authority over crypto-assets by the Australian Competition and Consumer Commission (ACCC) in April 19, wants to make it clear that crypto-assets are not exempt from standard laws.
“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,” ASIC Commissioner John Price said.
“In addition to potentially misleading statements in the white paper, the offer was an unregulated managed investment scheme. This means the offeror would have been in breach of the relevant provisions of the Corporations Act had the offer proceeded, potentially leading to serious penalties under the Act,” the ASIC statement wrote.