IN SUMMARY:
A NSW criminal conviction serves as a reminder about the consequences of acting without an AFSL (Australian Financial Services License).
We have previously explained why an AFSL is a legal requirement for virtually everyone who raises money in Australia.
The criminal conviction of John Bigatton, a former BitConnect crypto platform promoter, in the NSW District Court brings into sharp focus the very real consequences of acting without an AFSL (Australian Financial Services License).
The Judgment
In sentencing Mr Bigatton, the Judge observed that:
“the offending involved a breach of trust in that the recipients of the financial product advice were entitled to have an expectation that they were receiving advice from a sufficiently licenced and regulated individual.”
“…people who get involved in the promotion of financial products as part of a business for profit…need to be scrupulous in finding out for themselves what the law is and then to abide by that law. They need to understand that breach of these types of laws is a criminal offence and upon conviction they can expect to be met with stern penalties.”
Read the full judgment on the NSW Case Law website.
A reminder of the consequences of unlicensed conduct
People might think that only a ‘riskier’ type of investment product, such as crypto, will attract the attention of ASIC and lead a criminal prosecution, or that only unlicensed promotion of products such as crypto, or share investments, is illegal. However, that is not correct.
Not only do you almost always need an AFSL to raise money from investors, you also commonly need an AFSL to promote most types of financial investments, including, for example, investments in property trusts or property development projects.
In this instance, Mr Bigatton could have gone to prison for up to two years but was released by the Court on a three-year good behaviour “bond”.
When looking to raise money, or to promote any investments (regardless of the type of investors or the number of investors being targeted), it is vital to ensure that you understand the law, and that you work with people who know what they are doing and can guide you on your journey.
