Australian regulators are cracking down on “misleading or deceptive conduct” among initial coin offerings.
In an announcement released May 1[1], the Australian Securities & Investments Commission (ASIC) revealed that it is issuing inquiries to ICO holders suspected of conduct or statements that may be misleading to Australian investors, in addition to inquiries regarding unlicensed sales.
"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 commission stated. "This means the offeror would have been in breach of the relevant provisions of the Corporations Act had the offer proceeded, potentially leading to serious penalties under the Act."
ASIC Commissioner John Price asserted that this issue will be of key importance as the ICO market develops. "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," Price said.
In 2017, ASIC revised its guidance[2] to ICO issuers, bringing token offerings recognized as "managed investment schemes," "non-cash payment facilities," or derivatives offerings under the auspice of the Corporations Act of 2001.
There has also been growing concern about malicious marketing or sales practices from non-Australian ICOs[3]. The failure to fully disclose all risks in whitepapers and prospectuses – as required for other securities offerings – remains a point of concern, not only within the country but among the international regulatory community[4].
Early this year, the International Organization of Securities Commissions stated[5]:
"While some operators are providing legitimate investment opportunities to fund projects or businesses,
