Australia's markets regulator is suing BPS Financial on allegations that the company behind the qoin digital token ran misleading promotional advertisements.
The Australian Securities and Investments Commission (ASIC) said the advertisements made "false, misleading or deceptive representations" that consumers will be able to exchange qoin tokens "for other crypto assets or fiat currency (such as Australian dollars) through independent exchanges" and that "an increasing number of merchants" would accept it, according to a press release from the commission Tuesday.
ASIC said, however, that it wasn't always possible to exchange qoin on independent exchanges and that its promoter gave the impression that its network was growing even as the number of merchants fell.
Sarah Court, deputy chairwoman of the commission, said the case is important because it is the first time the organization is saying a crypto asset is a financial product, the Sydney Morning Herald reported. ASIC has asked a court to rule that qoin is a financial product that requires a license.
"We believe that more than 79,000 individuals and entities who have been issued with the Qoin Facility may have believed that it was compliant with financial services laws, when ASIC considers it was not," Court said in the release.
BPS Financial said it "does not agree with the ASIC's position" and "will be defending the matter," the Sydney Morning Herald reported.
The firm didn't immediately respond to a further request for comment.
In February 2021, Blockchain Australia, the leading blockchain industry body in Australia, ejected qoin from its membership list without making it clear why.
Australia's markets watchdog has said its priority is to warn customers about the risks involved with crypto, and the government has said it will use "token mapping" as a framework for regulation and the start of testing a central bank digital currency, even as the industry has called for legislation.
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