The Australian Securities and Investment Commission (ASIC) has ordered Holon Investments Australia Limited to cease offering crypto investment funds to retail investors for incomplete target market determination (TMD) submissions.
A target market determination (TMD) is a document that details the customer profile and associated risk for a product.
Holon had filed a TMD for crypto funds that invest in Bitcoin, Ethereum, and Filecoin on behalf of its clients. All three funds are managed by the crypto exchange Gemini.
According to ASIC’s press release on Oct. 17, Holon’s TMD did not clearly define the target market and associated risk for retail investors.
Holon specified in the TMD that its target market includes investors with a “medium, high, or very high risk and return profile and those looking to “use the fund for 75% to 100% of their investment portfolio.”
ASIC noted that the high volatility makes the fund risky for retail investors. The regulator said:
“Investors are likely to experience significant price volatility and deep negative returns in periods of asset price decline.”
Consequently, the regulator has ordered Holon to suspend offering crypto funds services or investment advice to retail investors for the next 21 days.
In the interim, Holon is expected to update its TMD submission and redefine its target investors and risk profile.
The regulator said:
“If ASIC’s concerns are not addressed in a timely manner, final stop orders will be placed on the funds.”
ASIC may consider taking regulatory actions against Holon if it fails to meet its order.
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