ASIC has made interim stop orders preventing Holon Investments Australia Limited (Holon) from offering or distributing three funds to retail investors because of non-compliant target market determinations (TMDs). These funds are:
- Holon Bitcoin Fund ARSN 659 090 294
- Holon Ethereum Fund ARSN 659 090 516, and
- Holon Filecoin Fund ARSN 659 090 614 (together, the Funds).
The interim orders stop Holon from issuing interests in, giving a product disclosure statement for or providing general advice to retail clients recommending investments in the Funds. The order is valid for 21 days unless revoked earlier.
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.
Each of the Funds is invested in an individual crypto-asset – bitcoin, ether and Filecoin. Crypto-assets are highly volatile and complex, making concentrated investments in individual crypto-assets very risky and speculative. Investors are likely to experience significant price volatility and deep negative returns in periods of asset price decline. In its product disclosure statements, Holon has disclosed the risk that assets in the Funds could face a total loss of value.
ASIC is concerned that Holon has not appropriately considered the features and risks of the Funds in determining their target markets. ASIC considers that the Funds are not suited to the wide target market defined in the TMDs, which includes investors:
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- with a potentially medium, high or very high risk and return profile; and
- intending to use the fund as a satellite component (up to 25%) of their investment portfolio; and
- intending to use the fund as a solution/standalone component (75-100%) of their investment portfolio.
ASIC expects Holon to consider the concerns raised about the TMDs and take immediate steps to ensure compliance. If ASIC’s concerns are not addressed in a timely manner, final stop orders will be placed on the Funds. Holon will have an opportunity to make submissions to ASIC before any final stop order is made.
ASIC may consider further regulatory action in relation to Holon and the Funds.