The Australian Securities and Investments Commission (ASIC) has taken legal action to wind up a retail over-the-counter (OTC) derivative issuer, Prospero Markets Pty Ltd (Prospero), over its alleged involvement in a money-laundering scheme.
ASIC Moves to Shut Down Prospero Markets over Money-Laundering Allegations
Prospero, which offers derivatives and FX contracts to retail and wholesale clients, is accused of breaching its Australian Financial Services (AFS) License conditions and obligations under the Corporations Act. ASIC’s application to the Federal Court follows an investigation by the Australian Federal Police (AFP) into the Changjiang Currency Exchange money remitting chain, which allegedly laundered millions of dollars for criminal syndicates.
The AFP’s operation, codenamed Avarus-Nightwolf, led to the arrest of several former officers and responsible managers of Prospero in October 2023 who were suspected of engaging in illegal proceedings. The Changjiang Currency Exchange was allegedly operated covertly by the Long River money laundering group. It's implicated in cleansing nearly $229 million from criminal activities over the last three years.
ASIC suspended Prospero’s AFS Licence in December 2023 after the company failed to lodge its 2023 audited financial accounts.
The regulator said it was concerned about the return of substantial client funds held by Prospero and believed that the appointment of liquidators was the best way to secure their efficient distribution. ASIC has nominated Andrew Cummins, Jonathon Keenan and Peter Krejci, of BRI Ferrier, as joint and several liquidators of the brokerage.
The matter is scheduled for a hearing in the Federal Court on 20 March 2024.
ASIC's Recent Enforcement Actions
ASIC has been proactive in regulating the financial market to protect investors and maintain market integrity. Recently, ASIC secured a bankruptcy order against Tyson Scholz, a social media influencer known as “ASX Wolf”, for failing to pay AU$456,296.64 as ordered by the court. This action underscores ASIC's commitment to enforcing legal judgments and ensuring that individuals comply with financial regulations.
Moreover, Russell Sandiford, a former Director of Reiwa-Capital, has pleaded guilty to two charges of dishonest conduct concerning the mismanagement of client investments. Sandiford's admission sheds light on the fraudulent activities within the financial sector, particularly concerning a scheme that promised significant returns but only distributed 1% of nearly $500,000 collected from investors to clients.
Additionally, an Australian federal court found Web3 Ventures Pty Ltd, trading as Block Earner, guilty of offering crypto products without the requisite financial services license. This ruling represents a significant step in regulating the burgeoning crypto market, highlighting ASIC's role in overseeing new financial products to ensure they comply with existing laws.
