The Australian Securities and Investments Commission (ASIC) has announced taking action against initial coin offerings (ICOs), investigating in particular misleading or deceptive conduct in the marketing and selling of cryptocurrencies.
The corporate regulator is probing ICO issuers and their advisers where it has identified conduct or statements that may be misleading or deceptive to potential investors, it said on Wednesday.
ASIC has already put a stop to "some" ICOs, with issuers either halting the ICO or promising to restructure the offering before proceeding, as a result of the inquiries made.
"These offers can involve significant risks for investors that are often not disclosed or well understood," ASIC said in a statement.
"Misleading or deceptive conduct is prohibited under the Australian Consumer Law and the ASIC Act."
An ICO is a form of internet-based crowdfunding that can be a source of capital for startups. In return for investor cash, the organisations involved offer virtual coins such as bitcoin or ethereum, and the transaction is recorded over the blockchain.
ASIC last month received delegated powers from the Australian Competition and Consumer Commission (ACCC) to take action under Australian Consumer Law relating to crypto-assets.
Such delegation enables ASIC to take action against misleading or deceptive conduct in marketing or selling of ICOs, even if the ICO does not involve a financial product.
"If you are acting with someone else's money, or selling something to someone, you have obligations," ASIC Commissioner John Price said.
"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. This is going to be a key focus for us as this sector