ASIC warns website operators about the risks of crowdfunding: Fines and up to five years’ jail

ASICThe Australian Securities and Investment Commission issued a warning about the risks of crowdfunding today and said enforcement included fines of up to $22,000 and up to five years’ imprisonment.

The corporate regulator has been monitoring the increasing use of crowdfunding for investment purposes, which involves using the internet and social media to raise funds in support of a specific project or business idea.

Australian companies, including Pozible and StartSomeGood.com, have enthusiastically embraced crowdfunding where project sponsors or pledgers typically receive some reward in return for their funds. But, in some cases, the reward expected may be of minor value and is merely incidental rather that the purposes of the contribution.

ASIC Commissioner Greg Tanzer said in a statement published by ASIC today that crowdfunding was not prohibited in Australia and is not generally regulated by ASIC.

More at SmartCompany.com.au

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