ASIC is taking aim at dodgy ICOs as it issues a warning to the sector

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  • ASIC says it has taken measures against a prospective initial coin offering (ICO) in Australia to protect investors.
  • Along with its powers under the Corporations Act, ASIC can also make inquiries into ICOs under consumer laws.
  • The ASIC commissioner said misleading or deceptive conduct will be a key area of focus.

Australia’s corporate regulator ASIC has taken action to prevent illegal initial coin offerings in Australia.

It follows an announcement by ASIC last September, where it clarified what type of ICOs would be regarded as a Managed Investment Scheme (MIS).

Any ICO which satisfies the criteria for an MIS in Australia would then be subject to registration, licensing and disclosure requirements in accordance with the Corporations Act.

And when it comes to cryptos, ASIC’s regulatory powers aren’t just limited to ICOs that don’t meet licensing requirements.

In April, it was delegated authority by the Australian Competition and Consumer Commission (ACCC) to take action under consumer law against ICO issuers that may be engaging in misleading or deceptive conduct.

“If you are acting with someone else’s money, or selling something to someone, you have obligations,” ASIC Commissioner John Price said.

“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 said it had already taken preventative action against a prospective ICO, based on concerns about its structure, the status of the offeror and material inaccuracies in its white paper.

“In addition to potentially misleading statements in the white paper, the offer was an unregulated managed investment scheme,” it said.

“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.”

Multiple issuers have either halted their ICO or indicated that they would make structural changes.

The latest update reflects efforts by regulators to crack down on riskier elements of the crypto market following last year’s surge in popularity.

In the US, the Securities & Exchange Commission (SEC) — which performs a similar function to ASIC in Australia — made its intentions clear on dodgy ICOs when it issued a wave of subpoenas in early March.

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