Australia Hits BPS Financial with Record $14M Penalty Over Qoin Wallet Scheme

Federal Court hands down heavy sentence for “misleading” crypto payment facility.

The Federal Court of Australia has ordered BPS Financial to pay $14 million in penalties for operating the Qoin Wallet without a license and deceiving thousands of investors. The judgment, delivered January 27, marks the culmination of a multi-year enforcement battle by the Australian Securities and Investments Commission (ASIC) against the Gold Coast-based issuer.

Justice Downes’ ruling breaks down the fine into two distinct strikes: $12 million for misleading and deceptive conduct, and $2 million for unlicensed operations. The severity of the fine reflects the scale of the harm.

BPS Financial raised over $40 million from approximately 93,000 wallet users, promising a liquidity that never existed.

The “Authorized Rep” Loophole Closed

BPS Financial’s defense hinged on a regulatory gray area. The company claimed it was exempt from holding its own Australian Financial Services License (AFSL) because it operated as an “authorised representative” of another license holder, PNI Financial Services.

The courts rejected this argument. In a May 2025 appeal judgment, the Full Federal Court ruled that BPS was acting on its own behalf, not PNI’s, effectively closing a popular loophole used by crypto projects to skirt direct regulation.

Liquidity Lies

The core of the $12 million penalty targets the false reality BPS sold to users. Marketing materials claimed Qoin tokens could be easily exchanged for fiat currency or other cryptocurrencies.

The reality was a closed loop.

Users found themselves unable to exit their positions as independent exchanges for the token did not exist or failed to support the volume. While BPS promoted a thriving merchant ecosystem, the court found the utility of the token was severely overstated.

“The size of these penalties underscores the seriousness of BPS Financial’s misconduct and is intended to send a strong message of deterrence to the digital asset industry,” said ASIC Chair Joe Longo.

Institutional Impact

Beyond the fine, the court imposed a 10-year ban on BPS Financial preventing it from operating a financial services business. This effectively dismantles the entity’s ability to pivot or re-brand within the Australian market.

For the wider industry, the message is binary: Renting a license is no longer a shield. Projects relying on “authorised representative” agreements to issue tokens or wallets face immediate existential risk if they cannot prove they are strictly acting as agents of the licensee.