ASIC has placed a stop order preventing Melbourne-based start-up Bitcoin Group Limited from publishing any statements about its intention to make an initial public offering of its shares until a prospectus is lodged.
In October last year, the company published a media release stating that it expected to list on the Australian Securities Exchange(ASX) by mid-November 2014, and hoped to become the world’s first publicly floated bitcoin trading company – despite local bitcoin mining and e-payments company DigitalBTC having already listed on the ASX under the name Digital CC Limited.
“We look forward to providing the highest level of transparency to the industry by listing on the ASX,” said Bitcoin Group CEO Sam Lee, at the time.
According to Reuters, “there are at least two other publicly traded bitcoin companies following “backdoor listings”, Bitcoin Group would be the first to offer shares in an IPO.”
ASIC is convinced that Bitcoin Group statements posted through China’s hugely popular instant messaging service aimed to attract potential investors’ interest:
“ASIC’s concerns relate to publications posted by the company via a social media application ‘Wechat’ seeking expressions of interest from potential investors to subscribe for shares if there is a proposed listing on the Australian Securities Exchange. The publications were made before Bitcoin Group Limited was registered as an Australian company by ASIC and before the lodgement of a formal disclosure document (e.g. a prospectus). ASIC’s understanding is that the company particularly targeted potential investors from the Chinese community.”
ASIC Commissioner John Price commented on the decision to issue a stop order:
“ASIC will often review pre-prospectus advertising or publicity to ensure legal requirements are being met. This is because any statements made about a potential offer may influence the investment decisions of consumers who will not have the benefit of all material information that would be included in a prospectus.”
As far as no documents have yet been lodged with ASIC, a media release outlining ASIC’s concerns has been issued.
“ASIC expects companies to be fully aware of their obligations regarding advertising or publicity that occurs before making a regulated disclosure document available to investors.”
“If they do not observe these requirements, then ASIC will take necessary action so that investment decisions are made in a confident and fully informed environment.”
The release states that ASIC’s action relates just to Bitcoin Group Limited rather than Bitcoin generally.
Earlier this week, Hong Kong lawmakers urged authorities to ban bitcoin as a group of more than 25 people went to police headquarters to complain over dealings involving the digital currency that media estimate could have duped investors of up to $387 million.