23–261MR Fintech company pays penalties for crypto product representations

Fol­low­ing ASIC action, fin­tech com­pa­ny Bob­bob Pty Ltd has paid $53,280 to com­ply with infringe­ment notices regard­ing rep­re­sen­ta­tions it made about a cryp­to-asset linked invest­ment product.

ASIC was con­cerned that Bob­bob made the fol­low­ing rep­re­sen­ta­tions that had the poten­tial to mis­lead con­sumers that the cryp­to-asset linked invest­ment product:

• was approved or licensed by ASIC,
• was sim­i­lar to, and there­fore shared some attrib­ut­es of, a bank account includ­ing the risk profile,
• was a safe and sta­ble invest­ment with min­i­mal risk of cus­tomers incur­ring cap­i­tal loss­es, and
• earned all cus­tomers an inter­est rate of 7.6% per annum from the time they invested.

ASIC Deputy Chair Sarah Court said, ‘ASIC was con­cerned Bobbob’s rep­re­sen­ta­tions poten­tial­ly mis­led cus­tomers about the product’s approvals, risks, char­ac­ter­is­tics and ben­e­fits. As a result, cus­tomers may not have ful­ly under­stood the prod­uct they were invest­ing in.’

Dur­ing the eight-month peri­od the Sav­ings Prod­uct was offered, approx­i­mate­ly 700 cus­tomers deposit­ed funds totalling around $1.6 million.

ASIC has also accept­ed a court enforce­able under­tak­ing from Bob­bob and its sole direc­tor Mr Byron Gold­berg regard­ing the rep­re­sen­ta­tions. The under­tak­ings include that:

• Bob­bob and Mr Gold­berg will each cease to be an autho­rised rep­re­sen­ta­tive of the Aus­tralian Finan­cial Ser­vices licensee which autho­rised Bob­bob to offer the product,
• Bob­bob will not pro­vide finan­cial ser­vices to retail clients for 12 months, and
• Mr Gold­berg will him­self, not pro­vide, and not be involved in man­ag­ing a busi­ness that pro­vides, finan­cial ser­vices to retail clients for 12 months.

‘ASIC will con­tin­ue to take enforce­ment action regard­ing the alleged­ly mis­lead­ing pro­mo­tion of cryp­to-asset based prod­ucts that could harm con­sumers. Cryp­to-assets can be high­ly volatile, inher­ent­ly risky and com­plex, mak­ing it essen­tial that investors receive accu­rate infor­ma­tion,’ con­clud­ed Ms Court.

Bob­bob paid the infringe­ment notices on 20 Sep­tem­ber 2023. Pay­ment of an infringe­ment notice is not an admis­sion of guilt or liability.

The spe­cif­ic rea­sons for ASIC’s con­cerns are set out in the four infringe­ment notices pub­lished on the Infringe­ment notices reg­is­ter and the court enforce­able under­tak­ing, which has been pub­lished on the Court enforce­able under­tak­ings reg­is­ter.

Background

From 1 April 2022 to 1 Decem­ber 2022, Bob­bob offered the cryp­to-asset based invest­ment prod­uct to Aus­tralian con­sumers. Bob­bob has returned all cus­tomers’ funds (with inter­est) since it ceased offer­ing the product.

Gen­er­al­ly, ASIC will only accept a court enforce­able under­tak­ing when we con­sid­er it achieves an effec­tive reg­u­la­to­ry out­come, after hav­ing weighed the reg­u­la­to­ry out­comes offered by oth­er enforce­ment remedies.

We look to sev­er­al fac­tors, includ­ing the nature and seri­ous­ness of the alleged mis­con­duct in con­sid­er­ing whether to accept a court enforce­able under­tak­ing. Impor­tant­ly, in this case, no con­sumer loss was identified.

Court enforce­able under­tak­ings can be used to com­ple­ment or enhance oth­er enforce­ment actions. How­ev­er, ASIC will not usu­al­ly accept a court enforce­able undertaking:

• instead of pur­su­ing crim­i­nal court proceedings,
• where the mis­con­duct is delib­er­ate or involves a high lev­el of reck­less­ness, or
• after a mat­ter has been referred to an ASIC del­e­gate or anoth­er spe­cial­ist body.

Fur­ther guid­ance on how ASIC uses court enforce­able under­tak­ings can be found in Reg­u­la­to­ry Guide 100 Court enforce­able under­tak­ings.

ASIC Infor­ma­tion Sheet 225 Cryp­to-Assets assists enti­ties pro­vid­ing cryp­to-asset relat­ed prod­ucts and ser­vices to under­stand their reg­u­la­to­ry obligations. 

ASIC’s Mon­eysmart web­site has infor­ma­tion for con­sumers about the risks of invest­ing in cryp­to-assets,