The Australian Securities and Investments Commission (ASIC) has filed a lawsuit against the Australian Securities Exchange (ASX) in Federal Court. The corporate regulator accuses the exchange of making misleading and deceptive statements regarding its now-shelved blockchain-based project to upgrade its trading systems.
ASIC claims that in early 2022, ASX falsely stated that the project to replace its Clearing House Electronic Subregister System (CHESS) was “on track for go-live” in April 2023 and was “progressing well.” The regulator alleges that, at the time, the project was not proceeding as planned, and country’s largest market operator had no reasonable basis to suggest it would be ready by the proposed date.
ASIC Chair Joe Longo said, “We believe this was a collective failure by the ASX Board and senior executives at the time,” highlighting that the project was, in fact, facing significant challenges.
ASX responded by stating that it is reviewing the allegations, with Managing Director and CEO Helen Lofthouse acknowledging the seriousness of the proceedings.
The project launched in 2016 to replace the aging CHESS system with a distributed ledger technology (DLT)-based system. However, after several delays and $170 million in spending, the project was paused in November 2022 following an Accenture report that identified major issues with the design. ASX ultimately abandoned the blockchain plan to explore more conventional alternatives.
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ASIC has yet to determine the penalties it will seek in the case.
The move comes shortly after the ASX approved its first spot Bitcoin (BTC) exchange-traded fund (ETF), issued by US asset manager VanEck.
This development was part of a broader trend in the Asia-Pacific region following the recent approval of the first batch of spot bitcoin and ether ETFs in Hong Kong.
VanEck is leveraging its global expertise and infrastructure from approved spot Bitcoin ETFs in the U.S. and similar products in Europe. ASX, which handles about 80% of the equity trades in Australia, has been actively engaging with several issuers interested in launching crypto asset-based ETFs.
