Summary and timeline of ASX treatment of ISX

This post was written by a friend who does not participate on Hot Copper - says the ignorance of some anti-ISX posters is much too depressing.

When I read this, I was struck by the fact that when the issues are condensed into simple statements and timeline, it permits a better understanding of the serious nature of the (alleged, perceived, real?) abuse of power by ASX. So I am sharing it here with thanks to my friend.

As usual, I have output the post first in .jpg for readability and after in text for searching.

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Text for searchability:

Background

·iSignthis Ltd (ISX) is the major shareholder in theNSXL, the 100% parent of the National Stock Exchange of Australia, Australia’ssecond largest stock exchange and the challenger exchange to the ASXmonopoly.

·ISX and NSX are both listed on the ASX. Neither NSXnor ISX are permitted to list on NSX under terms of NSX license.

·During 2018 and 2019, ISX makes a number of regulatory& licensing submissions that it intends to compete with ASX in OTC clearingsystems, currently 100% monopolised by ASX.

·Karantzis is the CEO of both ISX and NSX. Notably, heremains CEO of the parent company of a Tier 1 ASIC licensed market (license isalmost the same as the ASX’s). ASIC has the power to remove Karantzis fromoffice at any time.

·Media coverage has been voluminous, with the ASXallegations (below) repeated as if factual. Australian Financial Review (AFR)wrote an incredible 89 negative articles over 14 months, on a small Australiancompany that effectively was unknown and did no business in Australia. Noarticles had been written on ISX prior to ISX making its intent known toregulators and ASX that it seeks to compete with ASX monopoly.

·ISX was only EEA Authorised Electronic MoneyInstitution (AEMI) listed on ASX between 2017 and 2019 (EML followed during late2019 as an AEMI, which ironically, deals in crypto)

Timeline

·On 2nd October 2019, ASX made a number of allegations against ISX and suspended tradingin ISX securities with 11 minutes notice. ISX claimed that these allegationswere false and constituted deceptive and misleading conduct.

·October 2019, ASX alleged that ISX was issuing cryptocurrency and ICO’s and thatit did not have AEMI license (which was issued 2017). ASX could not (or chosenot to) distinguish between electronic money issue and unlicensed remittance,merchant laundering, crypto etc. ISX refutes these allegations and providescontrary evidence publicly.

·Between 2^ndand 8^th October 2019, ASX refers matter toASIC for investigation, under the terms of the ASX/ASIC Memo of Understanding

·8^th October ASIC opens investigation

·December 2019,

·ISX applies to UK FCA for AEMI license

·ISX sues ASX for denial of natural justice, lack ofprocedural fairness, and later also for deceptive and misleading conduct.

·March 2020,

·Visa Terminates on basis of derogatory media, but alsocites “possibility of AML”, and claims ‘systemic issues’, despite having auditedthe Company onsite a few months prior for Australian principal licensing. Visadoes not refer alleged AML to regulators, which in itself is a breach of itsobligations if it truly suspected AML.

·April 2020,

·ISX raises issue with ECB, which notes legal approachby ISX and recommends “out of court settlement” under EU directives, as matterappears to be access related.

·ASX issues a statement of reasons with highly damagingand false accusations.

·May 2020,

·Central Bank of Cyprus requests details and conductsreview. No issues raised.

·DG Comp opens preliminary investigation into Visabased on ISX evidence. Referral to FISMA as well. Investigation acknowledged byVisa in their July 2020 Form10-Q

·June 2020

·Internal Auditor delivers “clean” AML report toCentral Bank of Cyprus

·August 2020,

·ISX receives written all clear from AUSTRAC that thereare no AML issues

·Independent Expert (two partners of one of oldest law-firmin Australia) review the Visa termination from a disclosure perspective, andfind that whilst there was a “technical breach”, that ISX could not cure thebreach (of 1 day delay to making of its disclosure) as it had no mechanism todo so whilst shares were suspended.

·September 2020,

·ISX sues ASX in Federal Court for damages of A$462m beingfor deceptive and misleading conduct re allegations made without evidence

·FCA grants a UK AEMI with all PSD2 services, PISP andAISP to iSignthis.

·October 2020,

·Karantzis sues Australian Financial Review (AFR) fordefamation.

·November 2020,

·ISX receives notice that UK ICO and Cyprus ICO havedetermined that Visa has caused “harm” under the GDPR by its actions subsequentto ISX termination, and that action is being considered

·AFR concedes in its defence to Karantzis court actionthat it had no basis for publication of articles (which include AMLallegations) and offers to “make amends”. (“Truth” which is the defence todefamation, is not available, as no evidence supports “truth”. Thus makingamends is only option)

·DG Comp invites ISX to submit further information reVisa, SDW, and new Visa rules banning any other scheme “fronting” an electronicmoney service where Visa is used in the initial purchase of the eMoney. ISX andother AEMI’s claim this is anticompetitive.

·December 2020

·ASIC concludesinvestigation, whereby no fraud, AML, criminal or other matters are alleged.

·ASIC finds twoinvestordisclosure issues, which it has raised as a Federal Court Statement of Claim against ISX and its MD, one of which is the timing of the disclosure of the Visa termination. ASIC cannot impose a fine (which it seeks) without Federal Court involvement. It references Visa termination and correspondence details heavily, but only from a disclosure perspective. It seeks no action on anything other than the adequacy of ISX investors disclosures (which ISX asserts were compliant at all times).

Where to from here?

·ASX’s statement of reasons admitted it had notevidentiary basis, and attempted in its defence to assert that it is opinion(despite the use of ‘reasons’ and ‘findings’ in its report). It now appearsthat ASX ‘opinions; if they were such could not have been honestly heldopinions, especially as ASIC does not provide support to ASX opinions.