Authorities have seized over $41 million from a blockchain mining group in Australia for allegedly operating without a license. According to a new press release by the Australian Securities and Investments Commission (ASIC), civil actions are being taken against the NGS Crypto, NGS Digital and, NGS Group, as well as their respective directors, Brett Mendham, […]
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Australia’s financial regulator raised concerns about FTX Australia not long after it began operations in March 2022, according to documents.
Australia’s financial regulator reportedly raised concerns over FTX’s local Australian subsidiary as much as eight months before the exchange met its untimely end in November.
According to documents obtained by Guardian Australia, officers of the Australian Securities and Investments Commission (ASIC) were concerned about the way in which FTX Australia was operating as it was able to obtain a license in the country through a company takeover.
As per a previous report from Cointelegraph, FTX acquired its Australian financial services license (AFSL) by taking over financial institution IFS Markets in December 2021 before opening up for business months later in March 2022.
This is allowed FTX Australia to effectively sidestep the same level of scrutiny that is usually applied to new AFSL licensees, according to its ASIC chief Joe Longo.
As per newly obtained documents, the regulator reportedly issued a Sect 912C notice to FTX the same month it began operating, which required the crypto exchange to provide documents about its operations for ASIC to assess if it met AFSL license conditions.
With the notice, ASIC can direct the licensee to provide documents specifying what financial services they provide, the financial services business carried on by the licensee and to determine if the licensee satisfies the "fit and proper person test."
A briefing document obtained by the outlet has also confirmed that in the months between the initial concern and FTX collapsing on Nov. 11, the regulator had put the exchange under “surveillance activity” and a total of three notices were issued to FTX.
The document schedule also reveals that the regulator was still concerned about FTXs operations as late as October 2022.
Cointelegraph reached out to ASIC for a comment but did not receive a response before publication.
Related: ASIC fires industry warning shot as it sues BPS Financial over crypto promo
FTX Australia was one of more than 130 FTX-linked companies that halted operations after its parent company FTX went into bankruptcy proceedings on Nov. 11, 2022.
The Australian subsidiary of FTX had its financial license suspended on Nov. 16, 2022, and has gone into voluntary administration.
It's estimated around 30,000 Australian customers and 132 companies are owed money or crypto from the exchange.
The Australian securities regulator is pursuing BPS Financial Pty Ltd for allegedly making false and misleading representations and engaging in unlicensed conduct.
Australia’s financial regulator has issued a stark warning to Australian crypto asset providers amid launching civil proceedings against Australian firm BPS Financial Pty Ltd (BPS) over “misleading” representations concerning its Qoin token.
In an Oct. 25 announcement, the Australian Securities and Investments Commission (ASIC) said it has commenced civil penalty proceedings against BPS Financial for making “false, misleading or deceptive representations” to its 79,000 users about its token Qoin.
It alleges the company engaged in “unlicensed conduct” relating to Qoin, a digital currency launched in Oct. 2019 which allows participating merchants to accept as payment for goods and services.
ASIC Deputy Chair Sarah Court said this case should serve as a warning to all crypto issuers that ASIC is monitoring the crypto market for misconduct.
“Where it falls within our remit, ASIC will take targeted action against unlicensed conduct and misleading promotion of crypto-asset financial products that could harm consumers — this is a key priority for ASIC.”
She further explained its crucially important that consumers and investors are “provided with honest and accurate information” because, “Crypto-assets are highly volatile, inherently risky, and complex. Every crypto-asset is different, often making it difficult to compare with each other - or anything else.”
The court said they were particularly concerned over BPS Financial’s alleged misrepresentation that the Qoin Facility is regulated in Australia, and that the token can be used to purchase goods and services from an increasing number of merchants registered with BPS.
“We believe the more than 79,000 individuals and entities who have been issued with the Qoin Facility may have believed that it was compliant with financial services laws, when ASIC considers it was not.”
BPS has denied all wrongdoing in an Oct. 25 statement on the Qoin website, saying they disagree with “ASIC’s position” and “will be defending the matter.”
“Before it started, BPS consulted with ASIC in late 2019 regarding the structure of the Qoi project and did so again in early 2021. BPS will keep the community updated as it is able to.”
ASIC is seeking declarations, pecuniary penalties, injunctions and adverse publicity orders from the Court, but the date for the first case management hearing has not been scheduled.
Related: 1M Aussies will enter crypto over the next 12 months — Swyftx survey
The Australian regulator has ramped up scrutiny over the crypto sector over the last few months. In August, ASIC chief Joe Longo raised the alarm over the number of people that invested in “unregulated, volatile” crypto assets during the COVID-19 crisis.
At the time, he said considering there are “limited protections” for investors, the lack of understanding among retail investors makes “a strong case for regulating crypto-assets to better protect investors.”
The corporate regulator isn’t the first to pursue legal action against BPS.
In late 2021, Queensland-based law firm Salerno Law accused BPS of engaging in misleading and deceptive conduct and sought $100 million in damages on behalf of merchants, investors and holders who suffered losses after acquiring the Qoin utility token.
Cointelegraph reached out to BPS for further comment about the case, but did not receive a reply before publication.
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