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Australian watchdog suspends three Gemini-managed digital asset funds

Australia’s securities watchdog has suspended three digital asset funds whose target market “was too broad.”

The Australian Securities and Investments Commission (ASIC) announced this week that it had placed interim stop orders on three digital asset funds by Sydney-based Holon Investments. The three invested in BTC, Ether, and Filecoin. ASIC’s temporary order is valid for 21 days.

“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,” the watchdog stated in its press release.

The regulator cited Holon’s non-compliant target market determinations (TMDs) as the key reason for its orders. A TMD is a document that describes the target market for an investment product based on its profile, financial situation, and needs.

ASIC says 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.”

In a statement to one outlet, a spokesperson for the regulator claimed the TMDs were “too broad […] given the volatility and speculative nature of crypto markets” and that the company had not “appropriately considered the features and risks of the funds in determining their target markets.”

The regulator didn’t rule out taking further regulatory action against Holon for its three funds, all of which would have been managed by the Winklevoss twins-owned Gemini exchange.

“If the 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,” it added.

The latest regulatory action comes at a time when Australia’s government is ramping up its digital currency oversight. Last month, ASIC increased the number of personnel keeping an eye on digital assets to protect investors.

In August, Prime Minister Anthony Albanese pledged world-leading digital asset regulations under his administration, starting with a comprehensive token mapping exercise.

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