In May of this year, the Australian Securities and Investments Commission (ASIC) indicated that ICO issuers and their associated advisers would come under regulator scrutiny where their conduct or statements were identified as misleading or deceptive.  The Australian Competition and Consumer Commission (ACCC) authorized ASIC to take action against misleading and deceptive conduct in relation to ICOs, even where the ICO does not constitute a “financial product” under Chapter 7 of the Corporations Act 2001.

ASIC recently announced that, since receiving the delegated power, they have acted on five separate matters to prevent the raising of capital via ICOs where the appropriate investor protections were not in place. Amongst the problems identified are:

  • operating an illegal and unregistered managed investment scheme (MIS);
  • misleading and deceptive statements in disclosure documents, as well as in sales and marketing materials; and
  • not holding AFSLs with the appropriate authorisations.

In September, ASIC also issued a final stop order on a Product Disclosure Statement (PDS) issued by Investors Exchange Limited in relation to units in the New Dawn Fund, which had proposed to invest in cryptocurrency assets. A stop order is an ASIC administrative mechanism allowing the regulator to prevent offers being made under a disclosure document where the disclosure document contains a misleading or deceptive statement, an omission of information that is required under the law, or if a new circumstance has arisen since the disclosure document was lodged. In response to ASIC’s stop order, Investors Exchange Limited consented to the final stop order, such that no units could be obtained under the PDS.

ASIC continues to caution investors in relation to ICOs, noting that they are “highly speculative investments”.


Shemira is an associate in Baker McKenzie's Sydney office. Her practice focuses on FinTech, corporate crime and financial services.