Australia’s ASIC Sues Stock Market Operator Over Misleading Blockchain Upgrade Claims
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Australia’s corporate regulator ASIC sued market operator ASX for allegedly mishandling the blockchain-based Clearing House Electronic Subregister System (CHESS) replacement project, it said Wednesday.
ASX misled the market by stating the project was on track in early 2022, the lawsuit alleges. However, just six weeks later, ASX revealed that the project was likely to be delayed.
The ASX commissioned an independent review via Accenture later that year, uncovering significant issues with the scalability of the blockchain technology underpinning the new system. These problems led to the project being halted — and a $250m write-off.
ASIC has commenced proceedings in the Federal Court against Australia’s largest market operator, ASX Limited, for allegedly making misleading statements related to its Clearing House Electronic Subregister System (CHESS) replacement project https://t.co/yyruQ5PpFB pic.twitter.com/d3ZLUGMKSF
CHESS, the system used to record share ownership and process share trades on the ASX, was introduced in 1994. The ASX started developing a replacement system in 2015, adopting blockchain tech in 2017. Despite facing multiple setbacks, the ASX claimed in Feb. 2022 that the new system would be operational in 2023.
The regulator alleges that ASX knew the project was behind schedule. Still, it publicly declared otherwise, creating a false impression of the project’s progress.
“ASX’s statements go to the heart of trust in the integrity of our markets,” ASIC Chair Joe Longo said. “We believe this was a collective failure by the ASX Board and senior executives at the time.”
“Companies and
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