DigitalX updates on ICO litigation in Australia

Maria Nikolova

The company and the claimants have agreed to a mediation process set for March 27, 2019.

Blockchain-based solutions provider and ICO adviser DigitalX Ltd (ASX:DCC) has earlier today posted its interim financial report for the year to end-December 2018, with the document including an update on the litigation matter the company initially reported in September last year.

On September 28, 2018, DigitalX announced that it had been served with an Originating Application and Statement of Claim in the Federal Court of Australia filed by a group of parties relating to an investment made by those parties in an initial coin offering (ICO) to which the Company was an advisor.

In today’s report, DigitalX said:

“Since the initial filing of the Statement of Claim the Company and its legal advisors have continued to review and examine the claims made, the Company continues to deny any claim of wrongdoing. The Company and the claimants have agreed to a mediation process set for the 27th of March, 2019 after the date of this report. The Company still intends to vigorously defend this matter and protect the reputation of the Company”.

The claim is for a combined amount of approximately US$1,833,077 plus damages.

The situation around the status of ICOs in Australia has been unclear.

In the face of the overall supportive stance that the Australian Securities & Investments Commission (ASIC) has adopted regarding financial innovation, the regulator has admitted that some areas have triggered mixed responses on its part. In a speech delivered on November 12, 2018, ASIC Commissioner John Price, confirmed that the Australian regulator had some “mixed experience” with the crypto-asset sector.

Let’s note that ASIC has a dedicated section on digital transformation on its website. The information there explains that where a token offered through an ICO is a financial product, additional laws may apply above and beyond the prohibitions on misleading conduct. ASIC also explains that the legal status of an ICO is dependent on the circumstances of the ICO, such as how it is structured and operated as well as the rights attached to the token.

Back in November, John Price highlighted that, regardless of the structure of an ICO, there is a law that will always apply – that misleading or deceptive statements about a product are not allowed.

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