ASX faces lawsuit over blockchain upgrade

The Australian Securities and Investments Commission (ASIC) has launched a lawsuit against the Australian Securities Exchange (ASX), accusing it of misleading the public about the progress of a blockchain-based software upgrade. The project, initially presented as a groundbreaking initiative, has now been labelled a ‘collective failure’ by ASIC, following its eventual abandonment in late 2022. The regulator’s lawsuit alleges that ASX’s claims about the software’s development undermined market integrity and investor confidence.

ASIC’s case centres on a February 2022 update in which the company stated it was on track to implement the new system the following year. However, the project had already faced significant delays, and the exchange’s audit and risk committee had classified it as being in ‘red’ status shortly before the update was issued. The software, developed by Digital Asset, had been plagued with issues, leading to its ultimate shelving.

ASX CEO Helen Lofthouse, who took on the role in August 2022, responded by acknowledging the seriousness of the lawsuit and indicated that the company is reviewing the allegations. ASX’s shares dropped by up to 4% following news of the legal action, reflecting investor concerns about the company’s handling of the situation.

ASIC’s move against the company follows criticism from a Senate inquiry, which highlighted the regulator’s failure to fully anticipate the extent of problems with the software upgrade. ASX is expected to provide further updates, including its annual profit announcement, later this week.