Australia’s Securities and Investments Commission (ASIC) is filing a lawsuit against the country’s leading exchange over allegations of misleading statements regarding the progress of its delayed and ultimately abandoned blockchain-based Chess replacement system.
ASIC claims that statements made by ASX in announcements on February 10, 2022, which asserted that the project was “on-track for go-live” in April 2023 and was “progressing well,” were misleading. Just six weeks later, ASX shocked the market by announcing a strong likelihood of further delays to the initially projected go-live date. Following this revelation, the exchange engaged Accenture to review the project.
The Accenture review revealed serious challenges with the solution’s design and its capacity to meet ASX’s requirements. As a result of the findings, ASX halted the project and incurred a write-down of $250 million in costs.
ASIC contends that the assurances made in February were deceptive, as ASX lacked a reasonable basis to claim the project was on track to achieve its future milestones. ASIC Chair Joe Longo stated, “ASX’s statements go to the heart of trust in the integrity of our markets. We believe this was a collective failure by the ASX Board and senior executives at the time. We allege that the true state of affairs as of February 10, 2022, was that the project was not ‘progressing well,’ contrary to ASX’s announcement. The delay and subsequent pause of the project in November 2022 caused significant costs to ASX and market participants who relied on assurances about the project’s progress and scheduled go-live date.”
Longo added that ASIC has not yet determined the penalties it will seek for ASX’s alleged misrepresentations.
In response, Helen Lofthouse, ASX managing director and CEO, acknowledged the seriousness of the proceedings, stating, “We recognize the significance and serious nature of these proceedings. We cooperated fully with ASIC’s investigation and are now carefully reviewing and considering the allegations.”