Goin’s failure shows why cryptocurrencies will not replace money

Go somewhere else

Goin was founded in 2020 by Gold Coast-based BPS Financial. He also opened BTX Exchange and Goin Association and Goin Reserve for token trading. Goins was given a catchy slogan: “Be a part of where the world is going.”

The world has gone elsewhere. There isn’t much of a market for Goin anymore. BTX Exchange, which had not recorded any sales in the 24 hours up to 7pm on Monday, did not respond to an email asking when Goin last traded and at what price.

A lawsuit filed by disgruntled Goin investors failed on Friday due to a lack of funding, which is a shame because the court won’t hear the lawsuit’s claim that Goin failed because it was too popular:

“By March 2021, more than 12,000 people had registered for an account on BTX Exchange. This amount greatly exceeded the expectations of BPSF, BTX and Goin Association regarding the growth of trading on BTX Exchange.

“BPSF, BTX and Goin Association were attracting new Goin traders by offering Goin tokens for free. Issued with incentive Goin tokens, Goin traders were trying to convert that incentive Goin token into fiat currency instead of using it to buy goods or services on the BTX Exchange as intended by BPSF, BTX and the Goin Association.

“There were a growing number of participants in the Goin system who, instead of trading on the BTX Exchange by exchanging the Goin token for goods or services (or vice versa), simply bought Goin tokens from other participants (outside the BTX Exchange) and then tried to convert the purchased tokens into fiat currency. .”

Merchants were supposed to be the backbone of the Goin system. For Goin, it was their job to sell real things—candles, scarves, power tools. They were not meant to become Goin profiteers.

A bank run

Faced with this design flaw, BPS Financial decided to act like the old financial regulator during the bank run – where was the Goin stock? – and limited daily cash withdrawals from $2,000 to $100. Anyone who has studied liquidity crises can expect this not to work. It didn’t happen.

“The results of these issues were as follows: the number of sellers of Goin tokens increased significantly; The prices of individuals seeking to purchase Goin tokens were significantly lower than the price previously paid by individuals who owned them, or alternatively, the value of the goods or services those individuals exchanged for Goin tokens,” the lawsuit states.

Last week, Federal Court Judge Rodger Derrington asked the people who sued Goin to post a $750,000 bond. He said there was “no evidence” they could sell Goin tokens at the price they wanted, but they would have to prove they could pay their opponents’ legal fees if they lost.

According to BPS Financial, which requested that the claim be dismissed, they did not have the cash and the claim was “stayed” or suspended.

Deposit slips?

However, Goin’s legal troubles are far from over. The Australian Securities and Investments Commission is also suing BPS Financial.

ASIC’s argument seems to be that the Goin tokens were really deposit slips. You have given BPS and received Goin that you can cash back in when you get tired of watching the price of Goin go up and down. According to ASIC lawyers, this is not trading, this is banking.

According to ASIC, BPS Financial is not allowed to offer banking services because it does not have a licence. “BPS breached section 911A(5B) of the Corporations Act by carrying on a financial services business without holding an Australian financial services license from January 2020,” ASIC alleged.

You might expect BPS Financial to say: This is ridiculous! We never said we were a bank! Almost not on our behalf!

BPS Financial did not. According to an ASIC filing on Goin’s website, the company is an “Australian Financial Services Agent” — a sort of “Take that ASIC!” moment. This means that BPS Financial operates as a branch of a company called PNI Financial Services Pty Ltd, which it says is licensed to “deal in financial products”.

For those still unsure, the Goin trading site has some great questions and answers about cryptocurrency, including “Is Goin a pyramid scheme?” and “Is Goin a Ponzi Scheme?”

A tip for any potential Goin investor: Ponzi scheme operators usually don’t admit it.

Whether coins are deposit slips or currency is probably legally interesting. More importantly, when given the opportunity to buy and sell ordinary things using cryptocurrency, people speculated wildly, ran as the door closed, and then sued for their losses.

This makes it difficult to believe that Bitcoin will replace money.

Source link