HomeAltcoin NewsAustralia Clamps Down on More Crypto-Related Scams

Australia Clamps Down on More Crypto-Related Scams


The entire cryptocurrency market has declined around $600 billion in 2018. Nevertheless, this doesn’t seem to dampen the efforts of wrongdoers in Australia, as the local watchdog clamps down on an increased amount of cryptocurrency-related scams.

Crowd Fundraising Implies More Responsibilities

The Australian Securities and Investments Commission (ASIC) has confirmed that it has shut down several initial coin offerings (ICOs) on the premise of misleading or downright illegal statements throughout their marketing campaigns.

Additionally, the Commission has reportedly halted the issuance of a product disclosure statement (PDS) related to a crypto-asset managed scheme for investment.

In the months since April, Australia’s watchdog has purportedly been busy preventing ICOs from raising public capital without having the necessary protections for investors.

Speaking on the matter, ASIC commissioner John Price outlined:

If you raise money from the public, you have important legal obligations. It is the legal substance of your offer — not what it is called —that matters. […] You should not simply assume that using an ICO structure allows you to ignore key protections there for the investing public, and you should always ensure disclosure about your offer is complete and accurate.


ICOs Are Not IPOs, ASIC Says

The Commission also reiterated on the fact that ICOs, while revealing certain similarities, are rather different than Initial Public Offerings (IPOs) carried out on the conventional stock market. The main thing to consider, according to ASIC, is that the former fails to deliver the same level of pre-release scrutiny. The agency notes:

Usually they don’t offer any legal rights and protections, or claims to any underlying assets. Offers of shares in an IPO do offer legal rights and protections. ICOs use the internet to raise money, but they are not the same as crowd-sourced funding which is regulated under Australian law and offers basic investor protections.

Additionally, the Commission touched on the fact that some ICO projects might take a long time before they even become commercially viable, saying:

…some projects may take years before they become commercially viable, if at all. A large number of ICOs fail or do not increase in value.

Australia is not the only jurisdiction which is putting ICOs under the radar. As Live Bitcoin News reported recently, U.S. regulators are investigating 200 ICOs for possible fraud.

What do you think of ASIC’s move to increase the scrutiny towards ICOs? Don’t hesitate to let us know in the comments below!

Images courtesy of Shutterstock.


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