- Holon Bitcoin Fund, Ethereum Fund and FileCoin Fund target retail investors who want exposure to crypto prices
- They operate by getting investors to pool money in exchange for a proportional stake in the scheme
The Australian Securities and Investments Commission (ASIC), the main financial market regulator down under, has halted the activity of three crypto-related funds due to non-compliance, CoinTelegraph reported.
ASIC placed interim stop orders on three crypto funds managed by Holon, a local asset manager, they stated in a press release on October 17. The funds aim to invest in Bitcoin separately.
Gemini handles custody of the funds
The three funds - Holon Bitcoin Fund, Holon Ethereum Fund and Holon FileCoin Fund – target retail investors to want exposure to crypto prices. They operate by getting investors to pool money in exchange for a proportional stake in the scheme.
The funds use the pooled money to buy the digital asset named in them. According to a July blog from Holon, Gemini crypto exchange handles custody of the funds.
No ‘appropriate’ consideration of risk
An ASIC spokesperson expressed concern that Holon had not considered the risks and features of their products appropriately when establishing their target markets.
According to the regulator, the products were not suitable for the wide target market as defined, including market determinations with medium to very high returns and risks.
This category is defined as investors who planned to use the fund as up to a quarter of their portfolio and those who planned to use it for 75% to their entire investment portfolio.
Significant negative returns possible
The regulator added that investors in the cryptocurrency funds might suffer considerable negative returns, stating that Holon’s product disclosure statements (PDS) indicated the assets could lose all of their value. They said:
ASIC made the interim orders to protect retail investors from potentially investing in funds that may not be suitable for their financial objectives, situation or needs.
Effect of the interim stop
The suspension will keep Holon from providing general advice on the funds, sharing a PDS, or issuing retail investors shares of the funds. Unless Holon addresses the issue on time and in an appropriate manner, ASIC will issue a final stop order.
However, they will let Holon make submissions before making such an order. The interim stop will be effective for three weeks unless revoked earlier.
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