Australian regulator sues ASX over misleading statements about blockchain project
Date: 2024-08-14 Author: Henry Casey Categories: BUSINESS
The Australian Securities and Investments Commission (ASIC) has launched legal action against the country’s largest stock market operator, ASX Limited. The regulator accuses ASX of making false and misleading statements about the progress of its blockchain project, which was intended to replace the outdated electronic ledger system CHESS.
In November 2022, ASX abruptly abandoned the implementation of a blockchain system designed to settle trades after consultancy Accenture identified “significant issues” with its design. The decision forced the company to write off about A$250 million (US$168 million) following numerous delays. Back in 2017, ASX announced its intention to move one of its core services to a blockchain platform by the first quarter of 2020, but the project never materialized.
ASIC filed the lawsuit on Tuesday, but a final decision on the fine has not yet been made. However, according to the Australian Financial Review, ASX faces a maximum fine of more than A$500 million (about $330 million).
ASX CEO Helen Loftus said in a statement: “We recognize the importance and seriousness of these legal proceedings. We have fully cooperated with ASIC during their investigation and are carefully reviewing the allegations.”
Amid the allegations against ASX, there have been calls for the resignation of the company’s chairman, Damian Roche. ASIC alleges that statements made by ASX on 10 February 2022 describing the project as “on track” and on track to launch in April 2023 were false. These statements were “misleading” as the project was already significantly behind schedule at the time of publication.
ASIC Chairman Joe Longo said such statements undermined market confidence: “We believe this was a collective failure by the ASX Board and senior management at that time.” He also stressed that the critical importance of the project only reinforced the need for honest and transparent communication with the Australian public about its true status and completion timeline.
