The Australian Securities and Investments Commission (ASIC) said in a media release dated Oct. 17 local time that it has put interim stop orders on three of Australian asset manager Holon's crypto funds, which aim to invest in Bitcoin, Ethereum, FileCoin, and other cryptocurrencies.
According to Invest Smart, a target market perseverance is a document that specifies who a product is suitable for based on likely needs, goals, and financial situation, as well as how that product can be dispersed.
They also expressed the regulator's concern that Holon had failed to appropriately consider the highlights and risks of the funds in assessing their target markets.
ASIC stated in its statement that the funds are not suitable for the broad target market defined in the TMDs, including those with a medium, high, or very high risk and return profile. Those planning to use the fund as a satellite component for up to 25% of their portfolio and those planning to use it for 75% to 100% of their investment portfolio.
The firm also mentioned that investors in cryptocurrency funds could face serious negative returns, but the product disclosure statements (PDS) stated that they might face a total loss of value.
The specifics of what ASIC has asked to change are unclear, and their spokesperson did not provide additional information. However, the regulator stated that it expects Holon to consider the issues and immediately take measures to ensure compliance.
The temporary halt will inhibit from sharing a PDS, providing essential guidance on the funds, or issuing retail investors' shares of the funds.
The regulator also expects Holon to address the concerns as soon as possible, or the final stop order will be released. However, Holon will be allowed to submit submissions before deciding.
The funds, known as the Holon Bitcoin Fund, Holon Ethereum Fund, and Holon FileCoin Fund, are all managed investment strategies that aim to provide visibility to the price of the corresponding cryptocurrency. They work by investors pooling money and receiving a comparative stake in the scheme in return.
According to a July blog from the company, the pooled money is used to acquire the digital asset labeled in the fund, with possession managed by the Gemini crypto exchange.
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