ASIC v BPS Financial (Qoin): Federal court orders $14 million penalty in landmark crypto case

From January 2020, BPS Financial made available to the public a software product named ‘Qoin Wallet’ which was linked to a digital crypto token called ‘Qoin’. The product facilitated the viewing of Qoin balances for a wallet address recorded on the blockchain and provided a system for sending and receiving Qoin. 

In October 2022, ASIC commenced civil proceedings against BPS Financial in relation to Qoin Wallet alleging breaches of the Corporations Act 2001 (Cth) (Corporations Act) and Australian Securities and Investments Commission Act 2001 (Cth). 

On 3 May 2024, the Federal Court found that: 

• the Qoin Wallet constituted a ‘financial product’ under Australian financial services (AFS) laws in the form of a non-cash payments facility;
• BPS Financial had unlawfully carried on a financial services business for almost three years by issuing and providing financial advice about the Qoin wallet without holding the necessary AFS licence (in contravention of sections 911A(1) and 911A(5B) of the Corporations Act) (unlicenced conduct);
• BPS Financial had not engaged in the unlicenced conduct during the ten-month period between 5 November 2020 to 30 August 2021 because for that period it was operating as an authorised representative under the AFS licence of PNI Financial Services Pty Ltd ; and
• BPS Financial had engaged in misleading and deceptive conduct by publishing false and misleading representations about the ability of Qoin tokens to be exchanged for fiat currency and other crypto-assets, the growing number of Qoin merchants, and the official approval and registration status of the Qoin wallet (misleading and deceptive conduct). 

For a more detailed analysis of the facts of the case and the Federal Court’s initial decision, please refer to our previous articles: ASIC’s landmark win against BPS Financial sheds light on financial services law boundaries regarding crypto and Breaking news: authorised representatives can issue financial products.

Subsequently, on 18 June 2024, ASIC appealed the court’s finding regarding the applicability of the authorised representative exemption, seeking to clarify when a financial product provider who is an authorised representative of an AFS licensee is actually exempt from the requirement to hold an AFS license, on the basis that the court’s initial decision had brought into question ASIC’s ongoing position on the authorised representative exemption regarding the ‘issuing’ of financial products. 

For more information on ASIC’s reasons for its appeal and the specific orders sought, please refer to our previous article: ASIC appeals landmark judgement relating to issuing financial products under an authorised representative arrangement. 

On 30 May 2025, the Federal Court handed down its judgment in the appeal brought by ASIC and found that: 

• broadly, authorised representatives can only rely on the authorised representative exemption if their activities are in their ‘capacity’ as an authorised representative of an AFS licensee and not on their ‘own behalf’, a fact which will be subject to factual assessment by the court; and
• in this specific case, BPS Financial had engaged in the unlicenced conduct in the additional 10-month period between 5 November 2020 to 30 August 2021 because it had been acting on ‘its own behalf’ as opposed to as an authorised representative of PNI, meaning it could not rely on the authorised representative exemption and was required to hold its own AFS licence during that time. 

For further details regarding the appeal decision, please refer to our previous article: Appeal decision: Qoin issuer not exempted from needing its own AFSL. 

Between 20 and 21 November 2025, a hearing on the question of relief was held. 

On 27 January 2026, the Federal Court ordered that BPS Financial: 

• pay total pecuniary penalties of $14 million, made up of:
  • $2 million for the unlicenced conduct; and
  • $12 million for the misleading and deceptive conduct;
• be permanently restrained from making any false or misleading representation concerning:
  • the number of holders of the Qoin wallet;
  • the ability of Qoin tokens to be exchanged for fiat or other crypto-assets; and
  • that the Qoin wallet has been officially approved and/or officially registered;
• be restrained for 10 years from carrying on a financial services business without holding an AFS licence;
• publish an adverse publicity notice on the Qoin wallet application;
• take steps to request the publisher of the ‘qoin.com’ website to also publish an adverse publicity notice; and
• pay most of the costs incurred by ASIC for the proceeding. 

In delivering her judgment, Justice Downes stated that BPS Financials’ conduct was ‘serious and unlawful’. 

Her Honour stated that whilst the $12 million penalty for the misleading and deceptive conduct ‘properly reflects the [relevant] mitigating factors’, it also sufficiently accounted for ‘the objective recklessness of the conduct, [the] involvement of senior management, the serious and misleading nature of the representations, the characteristics of the target audience and BPS [Financials’] inadequate compliance systems’. 

Her Honour also stated that the primary purpose of deterrence to BPS Financial and to the digital asset industry as a whole is achieved by the $2 million penalty for the unlicensed conduct.