Australia's financial regulator is taking action against deceptive and misleading initial coin offerings (ICOs), citing "a serious breach of the Australian law."
Misleading or deceptive conduct is prohibited under the Australian Consumer Law and the ASIC Act.
The Australian Securities and Investments Commission (ASIC) said it is focused on misleading or deceptive conduct in the marketing and selling of digital or virtual tokens via ICOs. The Commission noted that these offers can involve significant risks for investors that are often not disclosed or well understood.
After receiving authorization from the Australian Competition and Consumer Commission (ACCC) to take action under the Australian Consumer Law relating to crypto-assets, ASIC launched inquiries to ICO issuers and their advisers whose conduct or statements were found to be misleading or deceptive. The Commission had already started identifying potentially unlicensed ICOs.
Following inquiries, some issuers have halted their ICO or indicated that the ICO structure would be modified.
ASIC said it recently took action to protect investors after identifying fundamental concerns with the structure of an ICO, the status of the offeror and the disclosure in its white paper. In addition to potentially misleading statements in the white paper, the offer was an unregulated managed investment scheme.
This means the ICO issuer would have been in breach of the Corporations Act had the offer proceeded, potentially leading to serious penalties under the Act.
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