The Australian Securities and Investments Commission has issued an interim stop order preventing Holon Investments Australia Limited from offering or distributing three of its crypto funds to retail investors. The interim orders are issued because of non-compliant target market determinations (TMDs).
In a media release on October 17, ASIC said that it has placed interim stop orders on three of Australian asset manager Holon’s crypto funds, which separately aims to invest in Bitcoin (BTC), Ether (ETH), and FileCoin (FIL).
The ASIC’s three crypto funds launched in partnership with Gemini are:
- Holon Bitcoin Fund ARSN 659 090 294
- Holon Ethereum Fund ARSN 659 090 516, and
- Holon Filecoin Fund ARSN 659 090 614
The temporary orders prevent Holon from issuing interests in the funds, providing a product disclosure statement for them, or giving general advice to retail clients that suggests investments in the funds. The order is valid for 21 days unless revoked earlier.
ASIC issued the temporary orders to safeguard retail investors from potentially investing in funds that might not be appropriate for their needs, circumstances, or financial goals.
ASIC felt concerned after Holon’s product disclosure statement revealed assets in the fund could face a total loss of value. It said Holon investments has not appropriately considered the features and risks of the funds in determining their target markets.
ASIC considers that the funds are not suited to the wide target market defined in the TMDs, which includes investors with potentially medium, high, or very high risk and return profiles, or those who intend to use the fund as a satellite component, up to 25% of their investment portfolio, as well as investors who intend to use the fund as a solution, as a standalone component, equaling 75 to 100% of their investment portfolio.
ASIC expects Holon Investments to consider the concerns raised about the TMDs and take immediate steps to ensure compliance. If ASIC’s concerns are not addressed in time, then a final stop orders will be placed on the funds.
ASIC may consider further regulatory action in relation to Holon and the funds.