Corporate regulator the Australian Securities and Investments Commission (ASIC) has sin-binned Sydney firm Holon Global Investments from offering three of its cryptocurrency funds to retail investors for three weeks due to concerns that they’re not suitable for the retail market, with the product disclosure statements pointing out that the funds could end up worthless.
The 21-day interim stop orders prevent Holon from offering or distributing three funds, covering Bitcoin, Ethereum and Filecoin, to retail investors because of non-compliant target market determinations (TMDs). If ASIC’s concerns are not addressed final stop orders will be placed on the funds.
The funds are the Holon Bitcoin Fund, Holon Ethereum Fund, and Holon Filecoin Fund.
“Holon has disclosed the risk that assets in the funds could face a total loss of value,” ASIC said.
Bitcoin and ether have plunged by around 60% in 2022, with the former currently bouncing around the US$19,000 mark. Ether is now down nearly 30% since July and now sits around US$1300.
The Holon Bitcoin Fund returned 21.6% in its first full operating month in July, when Bitcoin closed out the month at US$23,336. In August the fund fell -14.7% and now sits down -2.6% since its inception. The Ether fund, which launched at the same time, lost -6.4% in August, but remains 45.7% up after a 59.6% gain in July. The filecoin fund lost -2.7% in August to finish 0.3% up overall.
But it’s the Holon Photon Fund, which is not part of the ASIC stop order, that has been hardest hit over the last 12 months after investing in global tech companies such as Amazon Alphabet, Alibaba, Meta, Tencent and Tesla. It’s lost 32% of its value over the last 12 months and now sits up 3.7% since in launched in July 2019.
ASIC said in a statement that it made the interim orders against the crypto funder were “to protect retail investors from potentially investing in funds that may not be suitable for their financial objectives, situation or needs” adding that they consider the funds not suited to the wide target market defined in the TMDs.
“Each of the Funds is invested in an individual crypto-asset – bitcoin, ether and Filecoin,” ASIC said.
“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.”
The Web 3.0 focused digital assets manager was launched in 2019 by actuary Heath Behncke and had reportedly been looking to raise $70 million in a Series B this year, before trimming its sails and hunting for $10 million with Filecoin founder, Protocol Labs, reportedly tipping in around half of that figure.