The Federal Court has found BPS Financial Pty Ltd (BPS) guilty of engaging in unlicensed conduct concerning the 'Qoin Wallet', a non-cash payment facility utilizing a crypto-asset token known as 'Qoin.' The judgment was delivered by Justice Downes in proceedings brought by ASIC.
Further Proceedings Ordered by the Court
The court determined that BPS, from January 2020 onwards (with a brief exception of a 10-month period), violated the Corporations Act by lacking an Australian Financial Services Licence. Furthermore, BPS was not authorized by any licensee to issue or provide financial advice regarding the Qoin Wallet. Justice Downes also found BPS guilty of misleading or deceptive conduct and propagating false representations about the Qoin Wallet.
Among the misleading claims, BPS falsely asserted that the Qoin Wallet was officially registered or approved, misrepresented its usability for purchasing goods and services from Qoin merchants, and misled consumers regarding the exchangeability of Qoin tokens for other crypto-assets or currencies.
The court disclosed that prior to November 2021, the only digital currency exchange accepting Qoin was BTX Exchange, which had affiliations with BPS and did not facilitate independent exchanges of crypto assets. The court has mandated the involved parties to discuss further proceedings, including penalties, to address the remaining issues in the case. These deliberations are slated to occur later in 2024.
The Federal Court has found BPS Financial engaged in unlicensed conduct over a non-cash payment facility which used a #crypto asset token called Qoin https://t.co/tHQkU9lUpQ pic.twitter.com/2bWhGGyhej
— ASIC Media (@asicmedia) May 3, 2024
Legal Scrutiny over Sales Practices of Payment Facility
BPS aggressively promoted Qoin tokens to both retail consumers and business owners, colloquially termed 'Qoin Merchants,' as a method of payment for goods and services. As of September 30, 2022, the Qoin Wallet had been issued over 93,000 times, with BPS accumulating over $40 million from Qoin Token sales. Justice Downes affirmed that the Qoin Wallet constituted a financial product, specifically categorizing it as a non-cash payment facility.
Joe Longo, ASIC Chair, said: “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.”
This article was written by Tareq Sikder at www.financemagnates.com.
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