Interim stop orders made against three crypto funds
The Australian Securities and Investments Commission (ASIC) has made interim stop orders against three crypto funds from Holon Investments Australia.
Holon was now prevented from offering or distributing three funds to retail investors because of non-compliant target market determinations (TMDs) for 21 days unless revoked earlier.
These were Holon Bitcoin, Holon Ethereum and Holon Filecoin which each invested in a highly volatile and complex crypto-asset where investors were likely to experience significant price volatility and deep negative returns in periods of asset price decline.
This was to protect retail investors from potentially investing in funds that may not be suitable for their financial objectives, situation or needs.
“ASIC is concerned that Holon has not appropriately considered the features and risks of the Funds in determining their target markets. ASIC considers that the Funds are not suited to the wide target market defined in the TMDs, which includes investors:
- with a potentially medium, high or very high risk and return profile; and
- intending to use the fund as a satellite component (up to 25%) of their investment portfolio; and
- intending to use the fund as a solution/standalone component (75-100%) of their investment portfolio.”
ASIC said it expected Holon to consider the concerns raised about the TMDs and take immediate steps to ensure compliance. If ASIC’s concerns were not addressed in a timely manner, final stop orders would be placed on the funds and ASIC may consider further regulatory action.
Holon would have an opportunity to make submissions to ASIC before any final stop order is made.
To date, ASIC had issued 10 interim stop orders related to Design and Distribution Obligations (DDO), four of which had been lifted.
AUTHOR
Laura Dew
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