A Gold Coast company that launched the Qoin crypto token in 2020 has been fined $14 million by a federal court for “serious and unlawful misconduct”.

The Australian Securities and Investments Commission (ASIC) brought proceedings against BPS Financial Limited in 2022, alleging that BPS Financial Limited made false, misleading or deceptive representations to approximately 80,000 individuals or businesses.

On Tuesday, Judge Kylie Downs ordered BPS to pay a $14 million fine, be banned from providing unauthorized financial services for 10 years, and publish a notice online outlining the court’s decision.

“From January 2020 until mid-2023, the defendant BPS Financial Pty Ltd (BPS) engaged in serious and unlawful misconduct,” Mr Justice Downs said in his judgment.

“During the same period, BPS issued more than 96,000 Qoin wallets and received substantial revenue totaling over $42 million from the sale of Qoin tokens.”

Qoin background

Qoin was promoted as a digital currency that could only be traded on Block Trade Exchange (BTX).

Qoin and BTX were owned by BPS and operated from the same Southport office.

BPS also claimed that Qoin could be used to purchase goods and services from a growing number of Australian companies.

Approximately 96,000 Qoin accounts, or wallets, were issued, according to federal court documents.

In November 2021, a class action lawsuit was launched by Qoin users. Concerns that many businesses registered on Qoin’s website do not accept Qoin as payment And that it has lost all value.

This happened when the amount of Qoin sold on BTX collapsed from a high of $700,000 per day to almost zero by the end of 2022.

Last year, BPS settled a class action lawsuit by providing 4.3 million Qoin tokens to plaintiffs.

In his ruling, Judge Downs said that while “the value of Qoin tokens is likely to be limited,” the settlement was “better than nothing.”

Court finds BPS’ conduct ‘reprehensible’

ASIC commenced separate legal proceedings against BPS in October 2022.

BPS claimed that it did not have the appropriate financial services license and that a growing number of Qoin businesses falsely claimed that their tokens could be traded for dollars and other cryptocurrencies on independent exchanges.

In May 2024, the Federal Court ruled that BPS had engaged in misleading conduct but exempted it from holding an Australian financial services license for 10 months.

ASIC successfully appealed the exemption decision last year and a penalty hearing was held in Brisbane this week.

ASIC was seeking a $21 million fine, but BPS director Tony Wise told the Federal Court the company was “on the verge of bankruptcy”.

In his judgment, Mr Justice Downs said BPS’s actions were “reprehensible”.

She found that false or misleading claims were being made that Qoin could be exchanged for Australian dollars and other cryptocurrencies on independent exchanges.

Judge Downs also found that claims that Qoin could be used to purchase goods and services from a growing number of companies and that Qoin was officially endorsed were also false or misleading.

In his judgment, Mr Justice Downs said: “The withdrawal was persistent, and BPS is aware of it, and the fact that the agent stayed on for 12 months, whether through negligence or gross negligence, is reprehensible.”

She also found that BPS carried out financial services operations without an Australian financial services license.