ASIC has taken action to stop several proposed initial coin offerings or token-generation events targeting retail investors.
Problems identified by ASIC are the use of misleading or deceptive statements in sales and marketing materials, operating an illegal unregistered managed investment scheme and not holding a financial services license.
ASIC commissioner John Price said such offers involve significant risks for investors.
“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,” he said.
Bit Trade managing director Jonathan Miller said this move does not come as a surprise from ASIC and he looked forward to working with the regulator to make a formal path for regulated token offerings.
"We believe that Security Token offerings will be the next wave of innovation and look forward to working with ASIC to ensure that Australian companies and investors can take advantage of the technology," he said
Mr Miller said Australia had dropped the ball in its regulatory requirements for coin offerings but said there was room to move forward.
"Other jurisdictions are already ahead of the game with this, with Malta partnering with Binance to create a regulated security token exchange. ASIC is the next logical step for Bit Trade and we look forward to sharing insights with them on how this technology can create efficiencies and more upside for both companies and investors," he said.
Since April 2018, ASIC has acted against five other ICOs raising capital without the appropriate investor protections.
These ICOs have been put on hold and some will be restructured to comply with legal requirements.
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