You can buy just about anything with Bitcoin these days.
From Dirty Dancing sloth shower curtains (Target), to books like
'Dating White Women: A Practical Guide for Asian Men'
(Amazon). You can even secure a spot on Virgin Galactic (I know,
space travel - but when you've got a Dirty Dancing sloth shower
curtain, you lead with the curtain).
What about using virtual currency to pay ASIC fines?
Unfortunately ASIC doesn't accept Bitcoin. Well not yet, as the
captains of the Bitcoin industry would prefer it to be said. Still,
the operators of Bitcoin Group Limited might have been asking the
same question when they were issued with a stop order by the
corporate regulator recently. They got ASIC's attention when
they published statements on the social media app WeChat in
relation to their intention to make an initial public offering
(IPO) before the lodgement of a prospectus.
The Melbourne-based Bitcoin miner was targeting Chinese
investors to subscribe for shares in the company. WeChat may be
mostly unknown to people in Australia who use apps like Messenger
and SnapChat, but it's big in China (468 million active users).
For example, to celebrate the Lunar New Year last fortnight,
millions of Chinese exchanged virtual Bitcoin hongbao (red
envelopes) via WeChat on their mobile devices. 120 million
hongbao were given away in one evening, with an equivalent
of RMB 10 million (US$1.6 million) being exchanged.
With these figures in mind it is easy to understand why Bitcoin
Group Limited took the opportunity via WeChat to advertise their
proposed IPO. But under Australian corporations law, with only very
limited exceptions, a person must not advertise an offer for
securities that will require a disclosure document, or make
statements that would directly or indirectly induce people to apply
for securities, before that disclosure document (eg prospectus) has
been lodged with ASIC.
The laws are designed to protect consumers who may be lead into
investing in a company on the strength of its publicity rather than
the formal disclosure document. In a media release, ASIC
Commissioner John Price made clear that the regulator would take
action to ensure potential investors are fully informed before
making any investment decisions, as 'any statements made about
a potential offer may influence the investment decisions of
consumers who will not have the benefit of all material information
that would be included in a prospectus'.
So while social media and new technologies might make it
tempting to find novel ways to drum up wide-spread investing
interest, ASIC's steps to issue a stop order and media release
are a reminder that the pre-prospectus advertising restrictions
apply across all communication platforms.
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In the years following the global financial crisis of 2008 many Australian investors lost their life savings as financial products failed and the Australian Stock Exchange shed over 3,000 points.
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