The Australian Securities and Investments Commission (ASIC) has warned Bitcoin Group against further public statements over its intended initial public offering (IPO) after it tried wooing investors on WeChat, a Chinese social media platform.
According to its website, Bitcoin Group operates a mining pool where investors can earn bitcoins. The site is nearly identical in layout to Bitcoins Reserve, also officially based in Australia, and which claims to offer “cryptocurrency arbitrage,” merchant services, insured cold storage, and “cryptocurrency creation.” The cryptocurrency arbitrage service is claimed to have generated a return of over 205.8%.
The branding on the main slide on both companies’ homepages is, “Cryptocurrency Investment Concierge.”
Last summer, Bitcoins Reserve claimed to have lost roughly $70,000 in bitcoins after an alleged hacking attack. The reported CEO at the time of the story, Sam Lee, is now the CEO of Bitcoin Group. He is joined by Ryan Xu, CSO, and Allan Guo, CFO/CIO. Bitcoins Reserve is now instead headed by Sam He, according to its website.
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Last October, Bitcoin Group announced it was seeking to raise $20 million through an IPO. It boasted plans to become the world’s first publicly traded bitcoin company, despite the existence of others, even within Australia.
ASIC alleges that Bitcoin Group solicited investors for its hoped for IPO on WeChat. ASIC charges that this was in contravention of rules requiring the company to first become registered as an Australian company by the Commission and to first disclose a prospectus.
Explained ASIC commissioner John Price, “ASIC will often review pre-prospectus advertising or publicity to ensure legal requirements are being met. This is because 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.”
He went on to warn that if these requirements are not observed, “ASIC will take necessary action so that investment decisions are made in a confident and fully informed environment.”