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Australia’s financial watchdog halted the operations of three crypto funds of Holon Investments for 21 days, according to the regulator’s press release. The regulator said the move aims to “protect retail investors from potentially investing in funds that may not be suitable for their financial objectives, situation or needs.”
ASIC Suspends Holon’s Crypto Funds for 21 Days
Australian Securities and Investment Commission (ASIC), the country’s financial regulator, suspended three crypto funds belonging to Holon Investments, a Sydney-based asset manager and web3 data storage provider. The suspension, valid for 21 days, comes because of the company’s “non-compliant target market determinations (TMD),” ASIC said in a press release.
“ASIC made the interim orders to protect retail investors from potentially investing in funds that may not be suitable for their financial objectives, situation or needs.”
22-278MR ASIC places interim stop orders on Holon crypto funds
TMD refers to a document that identifies the target audience for a certain investment product. According to ASIC, Holon failed to appropriately consider the benefits and risks of the three funds at issue. All three crypto funds are managed by the cryptocurrency exchange Gemini.
The financial watchdog argues that the funds are not an appropriate fit for a wider target audience defined in their respective TMDs, which includes investors across various risk profiles. The target market defined in the TMDs also includes investors who want to use the fund “as a satellite component (up to 25%) of their investment portfolio” and those who use it “as a solution/standalone component (75-100%) of their investment portfolio.”
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Suspended Funds Invested in 3 Individual Cryptocurrencies, Exposing Investors to High Risk
Each of the three suspended funds is invested in a specific cryptocurrency including Bitcoin (BTC), Ether (ETH), and Filecoin (FIL). The crypto market is currently experiencing a major downturn, making concentrated investments in a single digital asset extremely risky.
The volatility in the crypto market remains significantly high as risk assets lost their appeal in recent months amid the current macroeconomic conditions involving record-high inflation and interest rates. BTC and ETH have dropped over 50% in the past 6 months, while the entire crypto market lost trillions of dollars in value.
ASIC said it will place “final stop orders” on Holon’s funds if the asset manager fails to address the issues. The firm can make submissions to the regulator before it places any final stop order, ASIC added.
Do you think US regulators should consider making similar moves with US crypto funds to protect investors? Let us know in the comments below.