The Australia Federal Court has ordered BPS Financial Pty Ltd to pay AUD$14 million in penalties for unlicensed conduct and misleading representations related to its Qoin Wallet cryptocurrency product.
The penalties, handed down earlier this week, comprise AUD$2m for unlicensed conduct and AUD$12m for misleading and deceptive statements. The Australian Securities and Investments Commission (ASIC) brought the enforcement action.
BPS Financial promoted the Qoin Wallet as a non-cash payment facility linked to a digital token called Qoin. The company operated without an Australian Financial Services Licence (AFSL) from January 2020 until mid-2023, issuing the product and providing financial advice without proper authorisation.
The court found BPS made several false claims to consumers. These included misrepresenting that the wallet had official regulatory approval, overstating the number of merchants accepting Qoin tokens, and falsely claiming the tokens could be exchanged for Australian dollars or other cryptocurrencies on third-party platforms.
Justice Downes stated BPS “engaged in serious and unlawful misconduct” and acted with “objective recklessness” involving senior management.
ASIC Chair Joe Longo said the outcome sent a clear message to the digital asset industry.
“Given the nature of these products, providers must have the appropriate licenses and authorisations, and investors must be able to make decisions based on clear and correct statements, especially as crypto products can be highly volatile, inherently risky and complex,” Mr Longo said.
“The digital asset industry is well on notice that its products will continue to be a focus for ASIC.”
Beyond the financial penalties, the court imposed several restraints on BPS Financial:
- A permanent ban on making false representations about wallet holders, token exchangeability and regulatory approval
- A 10-year prohibition on carrying on a financial services business without an AFSL
- Requirements to publish adverse publicity notices on the Qoin Wallet application and website
- An order to pay most of ASIC’s legal costs
ASIC has urged consumers to exercise caution regarding claims made about crypto-assets and related products.
