The Australian Securities and Investments Commission (ASIC) said Tuesday that it is taking aim at fraud in the initial coin offering (ICO) market.
In a statement published May 1, the agency said that it is "issuing inquiries to ICO issuers and their advisers where we identify conduct or statements that may be misleading or deceptive." Additionally, the securities watchdog suggested that it was moving to halt unlicensed activity as well.
"As a result of our inquiries, some issuers have halted their ICO or have indicated the ICO structure will be modified," ASIC disclosed, though it didn't say how many token sales have been canceled or changed in light of the agency's actions.
ASIC commissioner John Price explained:
"If you are acting with someone else's money, or selling something to someone, you have obligations. 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."
As CoinDesk previously reported, the move was perhaps expected. Price spoke about token sales on April 27, declaring the agency's intention to focus on overseas-based ICOs that target would-be Australian investors.
"I cannot stress enough that if you are doing business here and selling something to Australians - including issuing securities or tokens to Australian consumers - our laws here can apply," Price said at the time.
In Tuesday's statement, ASIC indicated that it would be scrutinizing a popular aspect of ICO marketing – the white paper – as it looks into whether those behind such sales are in compliance with Australian law.
"In one recent example, ASIC took action to protect investors where we identified fundamental concerns with the structure of an ICO, the status of the offeror and the disclosure in its white paper," the agency explained. "In addition to potentially misleading statements in the white paper, the offer was an unregulated managed investment scheme."
Australia map image via Shutterstock