The Australian Securities & Investment Commission (ASIC) has won a court case against BPS Financial. The firm is accused of deceptive practices in connection with its non-cash payment facility, powered by the Qoin token.
The Federal Court of Australia found that BPS made four false claims. Specifically, BPS claimed that Qoin was registered or approved by the government, legally complaint, freely exchangeable for other crypto assets or fiat and was accepted by a growing network of merchants.
The court ruled that BPS violated the Corporations Act and the Australian Securities and Investments Commission Act. It ordered the sides to confer on the next steps before another hearing this year, which may include penalties.
BPS launched Qoin in January 2020. According to its website, the Qoin ecosystem consists of its token, blockchain, wallet and a “payment facility.” Qoin has more than 100,000 users and 36,000 registered merchants, and there were 394 million Qoin tokens in circulation at the end of June 2021, it added.
A class action suit was filed against BPS in November 2021 for deception, noncompliance with regulations and being a pyramid scheme. That case appears to remain open. Qoin was also expelled from the Blockchain Australia industry association in February 2021.
ASIC initiated its action against BPS in October 2022. According to its statement, the court decision in its favor was the first ruling against a non-cash payment facility involving crypto. ASIC Chair Joe Longo said:
"ASIC has taken a number of enforcement actions against crypto asset businesses with the intention of clarifying what is a regulated product and when the provider needs a licence."
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ASIC sued financial product comparison website Finder.com in December 2022 for offering an unlicensed cryptocurrency yield-bearing product. The court ruled against ASIC in March and ASIC is appealing that decision.
In a case brought by ASIC against crypto lender Block Earner, the court ruled that managed crypto products providing a yield require a license, but products that “pass through” an entity as access to decentralized finance (DeFi) may not.
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