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Australian Court Favors Regulator in BPS Case

Australian Federal Court largely sided with the country's market regulator in its case against BPS Financial Pty Ltd
May 6, 2024

The Australian Federal Court has delivered a significant ruling in favor of Australia’s markets regulator, ASIC, in its case against BPS Financial Pty Ltd (BPS) concerning its Qoin scheme.

According to court documents, Judge J Downes concluded that ASIC succeeded in its Unlicensed Conduct Case against BPS.

However, the ruling did not cover the period when BPS acted as an authorized representative of PNI Financial Services Pty Ltd, which holds a non-cash payments license. This period lasted for 10 months, as confirmed by ASIC.

The legal dispute between ASIC and BPS began in 2022 when ASIC filed a lawsuit, contending that the entire Qoin project, including the token, blockchain, and wallet, constituted a financial product requiring a license.

ASIC’s case included the assertion that the Qoin Blockchain and Qoin Wallets constituted a single scheme. However, the court disagreed with this claim.

According to the court order, the Qoin Blockchain, the means of acquiring Qoin, and the registration process for business operators as Qoin Merchants were not components of the mechanism enabling non-cash payments.

Legal experts emphasize the significance of the court’s rejection of ASIC’s attempt to classify an entire blockchain as a “financial product” under Australian law. 

Michael Bacina, Blockchain Australia Chair and Digital Assets Lawyer, stated that the ruling recognized blockchains as foundational technology, separate from the legal implications of their usage.

Following the ruling, ASIC and BPS have been directed to confer and resolve the remaining issues, including the assessment of penalties, scheduled for later this month.

This ruling comes at a time when cryptocurrency is facing increased scrutiny in Australia.

- Last year, cryptocurrency exchange Binance Australia informed customers of the loss of access to Australian dollar deposits and withdrawals due to a decision by its third-party service provider.

- In July, officials from the Australian Securities and Investments Commission (ASIC) conducted searches at Binance Australia's offices.

- In March, Australia’s prudential regulator instructed banks to report their exposures to crypto firms and startups following the collapse of Silicon Valley Bank.

- In October, the Australian government proposed subjecting digital asset platforms to the same laws as other financial services providers.

In response to these developments, Blockchain Australia has launched new initiatives to address the issue of crypto scams and frauds.

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