2018-9-27 14:34 |
The Australian Securities & Investments Commission informed the public of its efforts to clamp down on initial coin offerings (ICOs) — a controversial form of fundraising for companies, targeted toward retail investors. The regulator also stopped the issue of a product disclosure statement (PDS) “for a crypto-asset managed investment scheme.”
ASIC Focuses on Investor RisksThe regulator identified three common problems: “the use of misleading or deceptive statements in sales and marketing materials,” “operating an illegal unregistered managed investment scheme (MIS)” and “not holding an Australian financial services license.”
John Price, the commissioner of ASIC, commented on the state of ICOs, saying:
“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.”
Price’s comments are important for companies trying to create new ICOs. While the agency does not stand against this method of fundraising, investor protection is one of its major concerns. Compliance with laws of any country is essential for all new ICOs so that authorities can scrutinize projects before they are floated to the public.
Australian Watchdog Tightens Its Grip on ICOsASIC also warned investors that ICOs are highly speculative in nature and remain unregulated. It acknowledged that genuine businesses are also using this fundraising method but said that many ICOs have turned out to be scams. It encourages investors to consult Moneysmart before deciding to invest in a business.
The regulator slipped into top gear in the second quarter of this year as it stopped five ICOs that did not have appropriate investor protection. While some of these ICOs have been put on hold, others have been restructured according to the legal requirements of the agency. It is also acting against one completed ICO but did not specify the details.
The agency also issued a final stop order on a product disclosure statement (PDS) for units in the New Dawn Fund. The PDS was issued by Investors Exchange Limited (IEL) and talked about the fund’s proposal to invest in various cryptographic assets. No new units in the fund could be obtained under the PDS now after IEL has consented to the final stop order. The agency acknowledged IEL’s cooperation in responding to its concerns.
Australian Regulator ASIC Cracks Down on Misleading ICOs was originally found on [blokt] - Blockchain, Bitcoin & Cryptocurrency News.
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