Melbourne-based cryptocurrency lending company Helio has been penalized by the Australian Securities and Investments Commission (ASIC) for falsely claiming to hold an Australian Credit License (ACL).
The ACL, enforced since 2009 through the National Consumer Credit Protection Act, imposes strict standards on entities that provide financial services to consumers, including cryptocurrency lenders like Helio.
Helio, a subsidiary of US-based Cyios Corporation, which also owns NFT platform Randomly, falsely advertised in an August 2019 news article that it had an ACL 8 credit license.
Helio: False claims and ASIC action
However, a subsequent investigation by the Australian regulator found anomalies in Helio’s claims. The lender’s claim that it obtained the license through its acquisition of CashFlow Investments was also debunked.
This breach was a breach of section 2009 of the National Consumer Credit Protection Act 30. Helio pleaded guilty to the charges brought by ASIC. ASIC withdrew the Level 2019 charges in February 2 in relation to the content of Helio’s website and took action under section 1914B(19)(d) of the Crimes Act 1.
ASIC deputy chair Sarah Court stressed the importance of disseminating accurate information to existing and potential customers. She noted that Helio’s deceptive statements misled customers into believing they were protected by a valid credit licence.
As a result, Helio was acquitted and released on bail and ordered to post a 12-month surety of AUD$15,000 (USD$9,600) on condition of being of good behaviour.
The company's sentencing outcome indicates that the company would only face a conviction if it breached the conditions of the bond. Notably, the potential $15,000 fine is well below the maximum $160,000 fine that could be imposed. The lenient sentence was due in part to Helio's admission of guilt in the case.
ASIC takes broader action against cryptocurrency firms
ASIC has recently begun cracking down on a number of cryptocurrency companies. The Helio case comes on the heels of ASIC filing a lawsuit against cryptocurrency-related trading platform eToro over concerns that its contracts for difference (CFD) products posed risks to investors.
The agency's estimates suggest that around 2021 eToro customers lost money when trading CFDs between October 10 and June 2023. In response, eToro pleaded guilty to ASIC's charges, influencing the subsequent sentencing.
CFDs are leveraged derivative products that allow speculation on digital asset prices. eToro was one of the pioneers in offering Bitcoin trading via CFDs and later expanded its support to other cryptocurrencies.
Similarly, last December, ASIC launched proceedings against Finder.com, alleging that the financial product comparison website offered cryptocurrency yield products without the necessary licence.