ASIC blasts dodgy crypto schemes

AUSTRALIA’S corporate watchdog says it is stepping up scrutiny on “misleading” initial coin offerings targeted at retail investors, adding it has already acted against several such proposals.

The Australian Securities and Investments Commission said consistent problems with proposed ICOs included the use of “misleading or deceptive” statements in sales and marketing and not holding Australian financial services licences.

ICOs, or the selling of digital coins or tokens, are increasingly popular with start-ups as a way to finance projects.

The ICO market is relatively small in Australia but ASIC is concerned poor conduct could have a negative impact on investor confidence.

“If you raise money from the public, you have important legal obligations,” ASIC Commissioner John Price said.

“It is the legal substance of your offer – not what it is called – that matters,” Price said, adding some proposed ICOs operated illegal, unregistered investment schemes.

Since April 2018, ASIC has prevented five ICOs from raising capital. These ICOs have been put on hold and some will be restructured to comply with legal requirements, ASIC said.

The regulator is taking action against one completed ICO.

“ICOs are highly speculative investments that are mostly unregulated, and while there are genuine businesses using this structure, many have turned out to be scams,” ASIC noted.