In delivering judgment for proceedings brought by ASIC, Justice Downes found that BPS, since January 2020 - and save for a 10-month period - contravened the Corporations Act as it did not hold an Australian Financial Services Licence, nor was authorised by a licence holder, to issue or provide financial advice about the Qoin Wallet.
Justice Downes also found that BPS engaged in misleading or deceptive conduct, making false or misleading representations about the Qoin Wallet's official registration, its usability for purchases from Qoin merchants, and consumers' ability to exchange Qoin tokens for other crypto-assets or currency through independent exchanges.
The Court found the only digital currency exchange that accepted Qoin prior to November 2021 was BTX Exchange, which was not independent of BPS and did not permit crypto assets to be exchanged with each other.
According to the corporate regulator, up to 30 September 2022, the Qoin Wallet was issued more than 93,000 times and BPS received in excess of $40 million from the sale of Qoin Tokens.
ASIC Chair Joe Longo said this was a significant ruling as the first court outcome against a non-cash payment facility involving crypto.
"ASIC has taken a number of enforcement actions against crypto asset businesses with the intention of clarifying what is a regulated product and when the provider needs a licence," Mr Longo said, highlighting crypto assets as "highly volatile, inherently risky, and complex".
"This makes it critically important that providers have the appropriate licences and authorisations, and that investors are provided with clear and accurate information. This case is an important reminder that many crypto products are financial products and that providers need to hold a licence."
Longo emphasised that the crypto industry's products will remain under ASIC scrutiny to protect consumers and ensure compliance with regulatory obligations.
"Entities should not be making claims about features, or the regulatory status of their offerings, that are false or misleading."
The Court has instructed the involved parties to discuss further proceedings, including penalties, during a forthcoming hearing scheduled for later in 2024.
