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Australia’s Securities and Investments Commission (ASIC) has filed a lawsuit against the Australia Securities Exchange (ASX) Ltd., accusing it of misleading statements about its blockchain trade settlement project, according to an Aug. 14 statement.

ASIC claims the ASX falsely stated in February 2022 that its project was “on track” for an April 2023 launch and that it was “progressing” when, in reality, it was not. The regulator argued that these statements were deceptive since the project was not meeting its milestones and was ultimately canceled.

The ASX’s blockchain initiative was intended to replace the Clearing House Electronic Subregister System (CHESS). However, ASIC noted that it was halted in November 2022 due to design challenges, and ASX wrote down costs of AUD250 million (over $165 million)

ASIC furthered that the project was already faltering as of February 2022, contrary to ASX’s optimistic announcements. This delay and eventual cancellation resulted in substantial losses for the ASX and its market participants.

ASIC Chair Joe Longo stated that the project’s failure undermined market integrity and reflected poorly on the ASX board and senior executives. He emphasized the importance of accurate information for market participants and the wide-reaching consequences of ASX’s missteps.

Longo added:

“Companies and market participants rely on what the ASX says about its operations to make their own decisions and investments. We expect the ASX to be a place to list and invest with confidence. When the ASX falls short, it has wide ranging consequences across the market.”

ASIC revealed that the latest issues followed ASX’s payment of AUD1,050,000 (over $660 million) in penalties in March due to lapses in compliance with the market integrity rules.

In an Aug. 14 statement, ASX CEO Helen Lofthouse said the company was reviewing ASIC’s allegations and recognized “the significance and serious nature of these proceedings.”

She added:

“We play a critical role at the center of Australia’s financial markets and continue to focus on supporting and delivering for customers. We are committed to taking ASX forward and have made strong progress as an organization over the past two years.”

ASX stated that ASIC is seeking declarations, pecuniary penalties, an adverse publicity order, and costs against it as part of the lawsuit.

The post Australian watchdog files lawsuit against ASX over misrepresenting $165 million blockchain project appeared first on CryptoSlate.

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