The Australian Securities and Investments Commission (ASIC) has handed down another sentence to an illegitimate crypto lender, this time to Helio Lending Ltd or “Helio”. The lender had falsely declared itself as holding a “transitional Australian Credit Licence”, and now has been penalised accordingly. Helio now faces a $989,000 package of financial penalties, remedies, and other court orders.
1. Australia’s Crypto Lending Platform Helio Fined for Claiming False License
Australian crypto lender Helio Lending has been fined by the Australian Securities and Investments Commission for making false claims of being an authorized financial services corporation. Helio Lending, launched in 2019, offers a number of services including loans on unsecured assets, including cryptocurrency, such as Bitcoin or Ethereum.
The commission found that Helio made “untrue, deceptive and misleading” claims about their services and licensing in a series of advertising material published online. Specifically, they proclaimed financial services provider license when in fact they had only received a limited license from the Australian Financial Complaints Authority.
The commission said that the false claims in the advertisement was likely to deceive the public into believing the company was more heavily regulated in the financial services sector compared to the reality. The commission issued a penalty of $19,800 to Helio and ordered they cease from making any misleading claims in the future.
While it is the first time Helio has faced such action, it is not the first time that similar false claims have been made in the industry. In May 2020, the commission issued an acceptable compensation scheme of $750,000 against CRYPTO Financial Australia for similar allegations.
- Australia Securities and Investments Commission issued a penalty of $19,800 to Helio Lending
- The commission said the false claims likely to deceive the public into believing the company was more heavily regulated
- CRYPTO Financial Australia was issued an acceptable compensation scheme of $750,000 for similar claims
2. ASIC’s Findings into Helio’s Misleading Licensing Practices
The Australian Securities and Investments Commission (ASIC) recently released a statement informing the public of its findings into Helio’s licensing practices. The regulator found that the company had made misleading statements that contravene the Corporations Act 2001.
According to the announcement, Helio had advertised that its software was covered by a ‘lifetime licence’ despite the fact that the contracts expired after only one year. Furthermore, the company had also vacated that same software was ‘exclusively’ available to customers, when in reality it had also been sold to multiple users.
In response, ASIC has ordered Helio to issue an apology for what it deems to be a misleading conduct and to pay a penalty of AUD 10,000. In addition, it must cease from making any more false and misleading statements as outlined in the Australian Consumer Law.
The regulator emphasised the importance of honest and transparent business practice for businesses operating in the financial services industry. This case serves as a key reminder that businesses need to be aware of their obligations when advertising in order to remain compliant with the law.
3. Increased Regulatory Pressure on Crypto Lending Services
Crypto-lending services have long been operating in a largely unregulated sector. However, this is beginning to change as governments around the world are now starting to focus on this area.
Recent events demonstrate just how much pressure is being ratcheted up on these services. For example, the Securities and Exchange Commission (SEC) of the United States recently charged Ripple Labs Inc., an organization engaged in the sale of digital assets, with conducting an unregistered sale of securities.
Regulators across the world are looking to clamp down on unregulated crypto-lending services. The UK Financial Conduct Authority (FCA) has announced that it is introducing licensing requirements for crypto-asset businesses operating in the UK. The FCA will require all firms offering these services to obtain permission from the regulator before they can operate.
These developments show that governments are getting serious about crypto-lending services and will seek to impose stricter regulations. This could have wide-ranging implications for the sector, including increasing costs and reducing the number of firms offering these services.
- Increased regulatory pressure on crypto-lending services
- SEC of the United States levies charges on Ripple Labs
- The UK FCA introduces licensing requirements for these services
- These developments could have far-reaching consequences for the sector
4. ASIC’s Ongoing Investigation into Licensure Claims in the Crypto Industry
Some of the most notorious players in the cryptocurrency industry have faced heat due to ASIC’s investigation into alleged false statements about their licensure requirements. ASIC, the Australian Securities and Investments Commission, is responsible for ensuring that the country’s laws related to investment and regulatory compliance are properly enforced. The investigation into the alleged false claims began in March 2019 and has been ongoing since.
According to the ASIC, some cryptocurrency companies have made false statements about their licenses, claiming that they are properly regulated when in fact they are not. This puts consumers at risk of losses because they are urged to invest in the companies based on these false claims.
- ASIC has launched investigations into a number of cryptocurrency companies, including Bitcoin Group, Bit Trade, Digital Crypto, and Independent Reserve.
- Some of the false licensure claims include statements that the companies are:
- Licensed by ASIC.
- Authorised by the Financial Conduct Authority.
- Approved or authorised by the Australian Transaction Reports and Analysts Centre.
ASIC’s investigation has the potential to have a significant impact on the cryptocurrency industry. It may encourage other companies to become properly licensed and therefore increase consumer confidence in the industry. It may also result in penalties and corrective action for those companies who have made false statements.
The Australian Securities And Investment Commission has made its stance on crypto lenders clear. By sentencing Helio for false license claims, the regulator sends a strong message to crypto lenders concerning the legality of their operations. Those who do not comply with the necessary laws will be subject to the regulator’s full force of justice.