ASIC prevails in landmark case against BPS Financial

ASIC has won a case against BPS Financial, following a Federal Court ruling that found the latter guilty of offering 'Qoin Wallet,' a non-cash payment facility that used the 'Qoin' cryptocurrency token, without an Australian Financial Services Licence (AFSL).

ASIC chair Joe Longo said this was a significant ruling as the first court outcome against a non-cash payment facility involving crypto.

BPS violated the Corporations Act by operating without an AFSL and lacked authorisation from a licence holder to issue or provide financial advice about the Qoin Wallet for most of the period since January 2020.

BPS was found to have engaged in deceptive practices, falsely claiming that the Qoin Wallet was officially registered or approved and could be used to purchase goods and services from an increasing number of Qoin merchants, when in fact it was declining.

BPS also misled consumers by asserting that Qoin tokens could be easily exchanged for other cryptocurrency or traditional currency through independent exchanges.

Prior to November 2021, the only digital currency exchange that accepted Qoin was BTXExchange, which was neither independent of BPS nor allowed for the exchange of crypto assets with each other.

"Crypto assets are highly volatile, inherently risky, and complex. This makes it critically important that providers have the appropriate licences and authorisations, and that investors are provided with clear and accurate information. This case is an important reminder that many crypto products are financial products and that providers need to hold a licence," Longo said.

"These proceedings should send a message to the crypto industry that their products will continue to be scrutinised by ASIC to ensure consumers are protected and that they comply with regulatory obligations."

The Court has directed the parties to confer with respect to directions that may be made for further hearing to determine the remaining questions in the proceeding, including penalties, on a date to be determined later in the year.