The Australian Securities and Investments Commission (ASIC) has taken action against an Australian company poised to commence its own initial coin offering (ICO) after “fundamental concerns” were raised over the token sale’s offering to investors.
Wagering and betting startup Neds announced its ICO last month, looking to raise $55 million through the sale of its own ‘nedscoin’. The company also introduced a unique offering where nedscoin token holders would receive quarterly dividends equal to 0.25% of the company’s quarterly turnover.
This was estimated to amount to some $7.75 million divvied out to investors by the end of 2019.
However, The Australian reports Neds has since withdrawn its whitepaper for restructuring after ASIC probed the business over its promise of dividends to investors, which the regulator claimed was misleading and potentially amounted to a managed investments scheme.
In a recent statement, ASIC said it had identified fundamental concerns with the structure of “an ICO, the status of the offeror and the disclosure in its white paper”.
“In addition to potentially misleading statements in the white paper, the offer was an unregulated managed investment scheme. 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,” the regulator said.
This follows an announcement from ASIC that the regulator will be cracking down on misleading and deceptive conduct from companies proceeding with ICOs, after having received delegated powers from the Australian Competition and Consumer Commission (ACCC) to take action against crypto companies under the Australian Consumer Law.
ASIC has begun issuing inquries to ICO companies and their advisors around issues of misleading and deceptive conduct.
StartupSmart understands that around eight different companies have been issued such notices. These companies are largely ones without product, however.
“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,” ASIC commissioner John Price said in a statement
“This is going to be a key focus for us as this sector develops.”
NOW READ: ASIC poised to release ICO guidelines: What this means for startups
Dominic Powell is a journalist at SmartCompany and a tech and music geek. When he’s not writing, you can find him reading or browsing record shops.
