Qoin Rejects Potential Class Action Citing Social Media ‘Witch Hunt’
By Dominic Cansdale
A potential class action planned against Gold Coast digital currency Qoin has been dismissed by its governor following months of criticism about the company’s future.
Salerno Law states it will review whether BPS and Qoin have been “engaging in misleading and deceptive conduct … making false or misleading representations … conducting pyramid selling of financial products” and “fraud”, and whether it has failed to “comply with financial services obligations” and “consumer guarantees”.
“It has been alleged by holders and merchants that they are either unable to accept Qoin payments or exchange the token for fiat currency due to the terms of BTX Exchange, leaving them with a token of no utility,” Salerno Law’s website stated.
A spokesperson declined to comment but the ABC understands more than 100 registrations of interest have been received.
But BPS director and Qoin governor Tony Wiese said “all it is, at this stage, is an attempt by Salerno Law to gain support”.
“There is an attempt to gain support in order to review the merits of a potential allegation that has been lodged by a person,” he said.
History of Qoin
Qoin launched in 2019 and has since increased in value from $0.15 to $9.19.
Qoin can be sold for Australian dollars, exclusively on Block Trade Exchange (BTX) at a pre-determined price, or used to buy goods and services.
However both Qoin and BTX are owned by BPS Financial Limited, prompting concerns around transparency and conflicts of interest within some parts of social media.
In February, the industry body that represents at least 70 organisations, Blockchain Australia, expelled Qoin from its membership but declined to comment further.
In March, BTX capped the sale limit of Qoin to $125 per account, per day.
The daily volume of Qoin being sold has dropped from a peak of more than $700,000 in early 2021 to just $2,100 this week.
Tony Wiese said a “witch hunt from the last year from the Reddit groups and all our detractors, faceless, fake names, and anonymous profiles” had lead to the decline.
Across some Facebook groups there has been widespread complaints that very few merchants listed in Qoin’s database still accept the currency, but Mr Wiese said over $125 million worth of Qoin has been traded in the past 18 months.
Qoin doesn’t meet ‘pyramid scheme’
Qoin has engaged around 300 agents — described as “independent contractors” by Mr Wiese — who sign people on to the Qoin system.
Salerno Law claims potential contraventions of consumer laws conducted by Qoin include “pyramid selling of financial products”.
Emails seen by the ABC from an independent accredited Qoin agent detail how some merchants were offered 150 Qoin last year for each person they referred to the digital currency.
But a statement on Qoin’s website said “merchants who wish to join the Qoin Program are not charged any fees to join and are under no obligation to recruit other merchants or consumers”.
Mr Wiese said “we don’t meet the basic outline of a pyramid scheme”.
“A pyramid scheme is where you recruit others for payment,” he said.
“When they sign up a merchant they get a payment, and then when they sell the merchant a membership they get a percentage of the membership.”
Black market of ‘desperados’
A black market has emerged online, with offers to sell Qoin for as low as 35 cents each, well below the official price of around $9.
Mr Wiese said that market exists for “the desperados” and there remains strong support among other sectors of social media.
“Obviously there are people that either have bought their Qoin for very cheap or have earned their Qoin for very cheap, that are cashing out,” he said.
Salerno Law states on its claim overview that it is not implying BPS or its associates have breached “obligations that they may owe to a third party”.