Bitcoin Group runs afoul of ASIC over social media

The Australian Securities and Investments Commission has issued a gag order to Melbourne-headquartered Bitcoin Group Limited ahead of the company's prospective initial public offering.

The corporate watchdog on Friday announced it had issued a stop order to prevent the company making public statements about an IPO on the ASX until it lodges a prospectus.

"ASIC’s concerns relate to publications posted by the company via a social media application 'Wechat' seeking expressions of interest from potential investors to subscribe for shares if there is a proposed listing on the Australian Securities Exchange," an ASIC statement said.

"The publications were made before Bitcoin Group Limited was registered as an Australian company by ASIC and before the lodgement of a formal disclosure document (e.g. a prospectus). ASIC’s understanding is that the company particularly targeted potential investors from the Chinese community."

ASIC described Bitcoin Group Limited as a Bitcoin miner. The company's website says it offers educational services and works "with a number of retail exchanges and OTC traders to provide procurement services, providing emergency liquidity when a larger than expected buy or sell order is beyond their capacity to service."

"ASIC will often review pre-prospectus advertising or publicity to ensure legal requirements are being met," ASIC Commissioner John Price said in a statement.

"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.’

"ASIC expects companies to be fully aware of their obligations regarding advertising or publicity that occurs before making a regulated disclosure document available to investors. If they do not observe these requirements, then ASIC will take necessary action so that investment decisions are made in a confident and fully informed environment."

ASIC said that normally a stop order would be published on its website and in fundraising documents lodged with it. However in this case ASIC issued a public media statement because no documents have been lodged with it yet.

Bitcoin Group Limited was approached for comment.

Last year company representatives reportedly said it was hoping to raise $20 million from its IPO.

Bitcoin and other digital currencies are currently the subject of a Senate inquiry. The inquiry is due to report in March.

The inquiry was established in the wake of guidance from the Australian Taxation Office about the tax treatment of Bitcoin.

Copyright © 2015 IDG Communications, Inc.

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