- ASIC plans to intensify enforcement in 2024 across sectors like crypto, financial services, and AI, targeting exploitative practices and potentially inspiring new regulations.
- The watchdog faces criticism for failing to alert the public about HyperVerse’s risks, a scheme exposed by The Guardian as a Ponzi operation with a fictitious CEO.
- This and recent ETF fake news in the US highlight the scrutiny even regulators face.
ASIC To Toughen Up Enforcement in Several Sectors
Australian Securities and Investment Commission (ASIC) Chair Joe Longo told the Australian Financial Review (AFR) that the regulator plans to drive a more assertive litigation course in 2024, warning that this year we will see more court cases – an announcement echoing the US Securities and Exchange Commission’s (SEC) ‘regulation by enforcement’ approach.
ASIC told the AFR they will target crypto, financial services, and super firms and those “operating in grey areas where the law is unclear or untested in the courts.”
There are some really grubby, unattractive practices where vulnerable consumers are being exploited. You can expect us to run some really interesting cases. We are going to be pushing the envelope.
ASIC Chair Joe LongoMr. Longo said this may highlight areas where new regulation may need to be introduced to protect the investing public.
Apart from the regulations of crypto exchanges, superannuation and fake sustainability claims ASIC also wants to target artificial intelligence (AI), especially around misleading practices where businesses use AI and algorithms to disadvantage customers, the AFR reported.
Did the Regulator Fail to Inform Australian Public?
The regulator itself was in hot water just days ago for its handling of the HyperVerse issue, where The Guardian uncovered that the Ponzi scheme’s CEO did not exist. Stephen Jones, Australia’s Assistant Treasurer, alleged that ASIC might have failed to warn customers about the risks involved with HyperVerse.
Users of the platform could exchange their crypto for “hyper units” that promised high daily rewards, with the potential to convert back to real crypto and fiat currency. However, this often resembles a Ponzi scheme where initial investors profit from new subscriptions, but as new investors dwindle, the scheme collapses, leaving later investors unable to withdraw funds and facing substantial losses.
A ‘promoter’ connected with the Ponzi got arrested in Florida last Friday. The allegations against ASIC illustrate that even regulators are not exempt from scrutiny, as highlighted by the recent controversies surrounding Spot Bitcoin ETFs and the handling of a tweet in the United States by the SEC and Chair Gensler.
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