ASIC Wins Landmark $9.3M Penalty Against BPS Financial Over Deceptive Qoin Wallet Scheme

Australia’s financial regulator has secured a landmark victory against a cryptocurrency firm, with the Federal Court ordering BPS Financial to pay $9.3 million in penalties for operating an unlicensed financial service and making misleading claims about its Qoin Wallet product. This decisive ruling, delivered in Sydney on Tuesday, represents one of Australia’s most significant enforcement actions against a digital asset provider and sends a clear warning to the cryptocurrency industry about compliance obligations.

ASIC’s Landmark Penalty Against BPS Financial

The Australian Securities and Investments Commission (ASIC) successfully argued that BPS Financial Pty Ltd engaged in serious misconduct between January 2020 and mid-2023. Consequently, the Federal Court imposed a total penalty of 14 million Australian dollars ($9.3 million), comprising $1.3 million for unlicensed conduct and $8 million for misleading and deceptive representations. Judge Downes described the company’s actions as “serious and unlawful misconduct” that involved senior management and revealed inadequate compliance systems.

ASIC Chair Joe Longo emphasized the importance of proper licensing for cryptocurrency products. “Given the nature of these products, providers must have the appropriate licenses and authorisations,” Longo stated. “Investors must be able to make decisions based on clear and correct statements, especially as crypto products can be highly volatile, inherently risky and complex.”

Misleading Claims About Qoin Wallet

The court found that BPS Financial made multiple false statements about its Qoin Wallet product. Specifically, the company claimed the wallet was officially approved or registered, that Qoin tokens could be readily exchanged for fiat currency or other crypto-assets, and that the token enjoyed widespread merchant acceptance. However, evidence presented during the proceedings demonstrated these claims were misleading.

BPS promoted the Qoin Wallet as a non-cash payment facility tied to its Qoin digital token. Nevertheless, the company issued this product and provided financial advice without holding an Australian Financial Services Licence, thereby breaching the Corporations Act. The court determined that BPS operated as an unlicensed financial services business while making deceptive representations to consumers.

Regulatory Context and Industry Impact

This ruling comes amid significant regulatory developments in Australia’s cryptocurrency sector. In December 2024, ASIC finalized new exemptions to simplify the distribution of stablecoins and wrapped tokens. These measures allow firms to use “omnibus accounts” with appropriate record-keeping, reducing compliance costs for businesses operating in digital assets and payments.

However, ASIC continues to identify regulatory gaps in digital assets as a key risk area. In its “Key issues outlook 2026” report, the regulator flagged retail exposure to opaque private credit, operational failures in superannuation, high-risk investment sales threatening retirement savings, AI-related consumer harm, and digital asset regulatory gaps as primary concerns for the coming year.

Court-Ordered Restrictions and Consequences

Beyond the substantial financial penalty, the court imposed significant restrictions on BPS Financial. The company has been barred from operating a financial services business without a license for the next decade. Additionally, BPS must publish court-mandated publicity notices on the Qoin Wallet app and website, informing consumers about the court’s findings. The company will also cover most of ASIC’s legal costs.

This case originated in 2022 when ASIC launched civil penalty proceedings against BPS Financial. Earlier judgments in 2024, upheld on appeal in 2025, established that BPS engaged in misleading and deceptive conduct. The current ruling represents the final determination of penalties and restrictions following those findings.

Comparative Regulatory Actions

The ASIC action against BPS Financial follows similar regulatory enforcement globally. For comparison:

Key elements of the BPS Financial case that distinguish it include:

• Unlicensed operation: Providing financial services without proper authorization
• Misleading merchant claims: False statements about Qoin token acceptance
• Exchangeability misrepresentations: Incorrect claims about converting tokens to fiat
• Regulatory approval suggestions: Implying official endorsement where none existed

Broader Implications for Crypto Regulation

This ruling establishes important precedents for cryptocurrency regulation in Australia. Firstly, it clarifies that digital asset products offering payment facilities or financial advice require proper licensing. Secondly, it demonstrates ASIC’s willingness to pursue substantial penalties for non-compliance. Thirdly, it highlights the importance of accurate marketing claims in the cryptocurrency sector.

The case also illustrates the evolving regulatory landscape for digital assets. While ASIC has eased some requirements for stablecoins and wrapped tokens, the regulator maintains strict enforcement against misleading conduct and unlicensed operations. This balanced approach aims to foster innovation while protecting consumers from deceptive practices.

Consumer Protection Considerations

Consumer protection remains central to ASIC’s regulatory approach. The Qoin Wallet case involved representations that could mislead retail investors about risk and functionality. Cryptocurrency products present unique challenges for consumer understanding due to their technical complexity and price volatility. Therefore, accurate disclosure becomes particularly important in this sector.

ASIC’s action signals to industry participants that cryptocurrency providers must maintain high standards of transparency and compliance. The regulator expects firms to ensure their marketing materials accurately represent product features, risks, and limitations. Furthermore, appropriate licensing remains non-negotiable for businesses offering financial services through digital assets.

Conclusion

The Federal Court’s $9.3 million penalty against BPS Financial represents a landmark moment in Australian cryptocurrency regulation. This decisive action by ASIC reinforces the importance of proper licensing and accurate representations in the digital asset sector. As the cryptocurrency industry continues to evolve, regulatory clarity and enforcement will play crucial roles in balancing innovation with consumer protection. The BPS Financial case establishes clear expectations for industry participants while demonstrating ASIC’s commitment to maintaining market integrity in Australia’s growing digital economy.

FAQs

Q1: What was the total penalty imposed on BPS Financial?
The Federal Court ordered BPS Financial to pay 14 million Australian dollars ($9.3 million) in penalties, comprising $1.3 million for unlicensed conduct and $8 million for misleading and deceptive representations.

Q2: What misleading claims did BPS Financial make about Qoin Wallet?
The company falsely claimed that Qoin Wallet was officially approved or registered, that Qoin tokens could be readily exchanged for fiat currency or other crypto-assets, and that the token enjoyed widespread merchant acceptance.

Q3: How long was BPS Financial operating without proper licensing?
The court found that BPS Financial operated without an Australian Financial Services Licence between January 2020 and mid-2023 while issuing the Qoin Wallet product and providing financial advice.

Q4: What restrictions did the court impose beyond financial penalties?
The court barred BPS Financial from operating a financial services business without a license for ten years, ordered the company to publish court-mandated publicity notices, and required BPS to cover most of ASIC’s legal costs.

Q5: How does this ruling affect Australia’s cryptocurrency regulation?
This landmark ruling clarifies that digital asset products offering payment facilities or financial advice require proper licensing and establishes that ASIC will pursue substantial penalties for misleading conduct and unlicensed operations in the cryptocurrency sector.