ASIC is aware of unlicensed entities promoting suspicious investment opportunities in digital gold vaults. These unlicensed entities are luring consumers by purporting to offer passive income and other benefits, such as payments, in return for recruiting or referring new investors.

The entities target trusted relationship-based networks, such as families and friends, and use online articles and social media posts and groups, such as Instagram and Facebook to provide details about the investment.

Consumers invest by obtaining the rights to use a digital gold vault with a certain storage capacity and for a specified period of time.

Other investors will then use the digital vault to store their virtual gold, and this allegedly generates a passive return for the initial consumer.

Consumers who invest normally have limited avenue for recourse in the event of a dispute as these entities are based overseas. The terms and conditions may also make it difficult to resolve any dispute.

ASIC is concerned because:

• There is an emerging trend in unlicensed entities promoting suspicious investment opportunities in digital gold vaults.
• When investing in digital or virtual gold a consumer will commonly purchase tokens or units which are marketed as one-for-one by real gold bullion securely stored in professional vaults. Some digital gold token offerings are recorded on the blockchain and are held in a digital wallet, which can then be sold on an exchange.  Alternatively, some digital gold offerings can be listed on securities exchanges such as the ASX, as exchange traded products (ETPs).
• Depending on the structure, the investments in digital gold vaults may be a ‘financial product’ under the Corporations Act 2001 and entities offering these investments may require an Australian financial services (AFS) licence or authorisation pursuant to an AFS licence. Also depending on the structure, the investments may constitute a 'managed investment scheme' which may require registration under the Corporations Act 2001.
• It can be difficult to verify whether the digital gold vaults in fact exist because the entities offering the vaults are typically based overseas. It is possible that the passive returns generated may actually be funds from new investors, resulting in some schemes potentially being ponzi schemes.
• Some of these entities may also offer debit card products that allow consumers to withdraw cash and make purchases globally. These products may constitute a non-cash payment facility which is a ‘financial product’ under the Corporations Act 2001. Issuers of financial products in Australia must generally hold an AFS licence.

If you spot any suspicious investment opportunity by an unlicensed entity, please report this to ASIC.

ASIC is Australia’s corporate, markets and financial services regulator.