Australian Authorities freeze Investment Firm's Access to Bitcoin and Ethereum

By: Dickson Arinze

Australian Authorities freeze Investment Firm's Access to Bitcoin and Ethereum

October 17, 2022 2:13 PM

Asset manager Holon Investments has been temporarily barred from selling or distributing its Bitcoin, Ethereum, and FileCoin-tracking funds due to an interim stop order issued by the Australian Securities and Investments Commission.

 

According to the announcement, the decision was made due to Holon's non-compliant TMDs (target market determinations). To safeguard retail investors from investing in funds that may not be appropriate for their financial goals, situation, or needs, Australia's top market regulator issued interim orders.

 

 

In the official announcement,

 

"The interim orders prohibit Holon from recommending the Funds to retail clients, issuing interests in the Funds, and providing a product disclosure statement for the Funds. Unless it's revoked sooner, the order will remain in effect for 21 days."

 

Holon's Bitcoin, Ethereum, and Filecoin funds are deemed 'unsuitable' for investors

 

The agency is also worried that Holon hasn't adequately considered the characteristics and dangers of the funds when setting its sights on those consumers. It is common knowledge that investors typically suffer extremely negative returns during bear market periods. The agency did find that Holon disclosed the "risk that assets in the funds could face a total loss of value" in its product disclosure statements.

 

The ASIC believes that the broad target market defined in the TMDs, which includes investors with a "medium, high, or very high risk and return profile," those intending to use the fund as a "satellite component" [up to 25%] of their investment portfolio, and those intending to use the fund as a "solution/standalone component" [75%-100%] of their investment portfolio, are not appropriate for the Bitcoin, Ethereum, and Filecoin funds.

 

There will be permanent stop orders placed on the Funds if ASIC's concerns are not addressed promptly. Nonetheless, Holon can provide input to the agency before a final stop order is issued.