Bitcoin Group pulled up for pre-IPO chatter

The Australian Securities and Investments Commission (ASIC) has warned Australian bitcoin trading company Bitcoin Group Limited away from making public statements concerning its proposed initial public offering (IPO) until after it lodges a prospectus.

ASIC released a statement on Friday saying that it had placed a stop order, prohibiting the company from publishing any statements concerning its intention to list publicly in Australia. This came after the company posted information about its proposed IPO on Chinese social media platform WeChat.

According to ASIC, Bitcoin Group posted publications via the social media platform seeking expressions of interest from potential investors to subscribe for shares if the company goes ahead with its proposed listing on the Australian Securities Exchange (ASX).

In October last year, the company published a media release stating that it expected to list on the ASX by mid November 2014, and hoped to become the world's first publicly floated bitcoin trading company -- despite local bitcoin mining and e-payments company DigitalBTC having already listed on the ASX under the name Digital CC Limited.

"We look forward to providing the highest level of transparency to the industry by listing on the ASX," said Bitcoin Group CEO Sam Lee at the time.

However, now ASIC says that the company's publications relating to its proposed IPO were made known via WeChat before Bitcoin Group Limited was registered as an Australian company by the commission, and before the lodgement of a formal disclosure document -- that is, a prospectus.

ASIC said its understanding is that the company particularly targeted potential investors from the Chinese community.

"ASIC will often review pre-prospectus advertising or publicity to ensure legal requirements are being met," said ASIC commissioner John Price. "This is because any statements made about a potential offer may influence the investment decisions of consumers who will not have the benefit of all material information that would be included in a prospectus.

"ASIC expects companies to be fully aware of their obligations regarding advertising or publicity that occurs before making a regulated disclosure document available to investors.

"If they do not observe these requirements, then ASIC will take necessary action so that investment decisions are made in a confident and fully informed environment," he said.

ASIC emphasised that its action to prohibit Bitcoin Group Limited from publishing information about its proposed IPO until after it had lodged a prospectus relates just to "this company" rather than bitcoin generally.