Australia’s Assistant Treasurer Stephen Jones has expressed concern over the Australian Securities Investment Commission (ASIC) for failing to issue warnings to consumers regarding the potential dangers of the HyperVerse crypto scheme. This article will delve into the reasons behind ASIC’s inaction and shed light on the implications of this oversight.
Upon reviewing the recent Guardian report, it becomes evident that the ASIC’s failure to caution the public about the HyperVerse crypto scheme raises serious questions about its effectiveness as a regulatory body. While other global regulators in countries such as New Zealand, Hungary, Germany, Canada, and the United Kingdom issued warnings as early as 2021, Australian regulators remained conspicuously silent. One may wonder why ASIC did not follow suit and take proactive measures to protect its citizens.
A Systemic Failure
The HyperVerse crypto scheme, which has been flagged as a suspected pyramid scheme by foreign authorities, managed to evade scrutiny from Australian regulators. This failure is particularly concerning as the scheme resulted in significant global losses, with on-chain analytics firm Chainalysis projecting user losses to reach $1.3 billion. The operation was headed by HyperTech, a company led by Chairman Sam Lee and “founder” Ryan Xu, both of whom were former directors of Blockchain Global, an Australian crypto company that collapsed in 2021, leaving creditors with a debt of $58 million.
The HyperVerse crypto scheme operated as a membership system, luring clients with promises of lucrative rewards. Participants were required to pay for subscription packages while earning 0.5% daily returns. Additional incentives were offered for onboarding new members and building referral networks. Unfortunately, the scheme followed a typical Ponzi-like structure, with early investors receiving funds from subsequent clients, ultimately leading to significant losses for those who entered later.
A Disturbing Pattern
This is not the first time that Sam Lee has been associated with fraudulent activities. Another investment platform founded by Lee, known as We Are All Satoshi (WAAS), received a “desist and refrain” order from California’s regulators. The Commissioner of Financial Protection and Innovation in California described WAAS as a “fraudulent pyramid and Ponzi scheme.” These revelations raise serious concerns about the due diligence conducted by Australian regulators when allowing individuals with a history of involvement in dubious schemes to operate within the financial sector.
Call for Accountability
Assistant Treasurer Stephen Jones rightly questions why ASIC did not issue warnings to the public regarding the HyperVerse crypto scheme. In any ordinary course of action, operations like these should trigger red flags and merit proactive measures to protect consumers. The lack of action on the part of ASIC reflects a disregard for the safety and well-being of Australian citizens. The ASIC must be held accountable for its failure to fulfill its regulatory responsibilities.
To prevent similar incidents from occurring in the future, it is crucial for ASIC to conduct a thorough review of its operational procedures. This review should involve identifying and rectifying any deficiencies in the system that led to the oversight of the HyperVerse crypto scheme. Additionally, stronger collaboration and information sharing with global regulatory bodies should be prioritized to ensure timely identification and mitigation of potential risks posed by fraudulent schemes.
The failure of the Australian Securities Investment Commission (ASIC) to warn citizens about the dangers of the HyperVerse crypto scheme is a significant lapse in regulatory oversight. This article highlights the need for accountability within ASIC and emphasizes the importance of conducting comprehensive reviews to prevent similar incidents in the future. The protection of consumers should be at the forefront of regulatory bodies’ priorities, and swift action must be taken to restore public trust in the efficacy of Australia’s securities regulation.
Leave a Reply