You can buy just about anything with Bitcoin these days.  From Dirty Dancing sloth shower curtains (Target), to books like ‘Dating White Women: A Practical Guide for Asian Men’ (Amazon). You can even secure a spot on Virgin Galactic (I know, space travel - but when you’ve got a Dirty Dancing sloth shower curtain, you lead with the curtain).

What about using virtual currency to pay ASIC fines? Unfortunately ASIC doesn’t accept Bitcoin. Well not yet, as the captains of the Bitcoin industry would prefer it to be said. Still, the operators of Bitcoin Group Limited might have been asking the same question when they were issued with a stop order by the corporate regulator recently. They got ASIC’s attention when they published statements on the social media app WeChat in relation to their intention to make an initial public offering (IPO) before the lodgement of a prospectus.

The Melbourne-based Bitcoin miner was targeting Chinese investors to subscribe for shares in the company. WeChat may be mostly unknown to people in Australia who use apps like Messenger and SnapChat, but it’s big in China (468 million active users). For example, to celebrate the Lunar New Year last fortnight, millions of Chinese exchanged virtual Bitcoin hongbao (red envelopes) via WeChat on their mobile devices. 120 million hongbao were given away in one evening, with an equivalent of RMB 10 million (US$1.6 million) being exchanged.

With these figures in mind it is easy to understand why Bitcoin Group Limited took the opportunity via WeChat to advertise their proposed IPO. But under Australian corporations law, with only very limited exceptions, a person must not advertise an offer for securities that will require a disclosure document, or make statements that would directly or indirectly induce people to apply for securities, before that disclosure document (eg prospectus) has been lodged with ASIC.

The laws are designed to protect consumers who may be lead into investing in a company on the strength of its publicity rather than the formal disclosure document. In a media release, ASIC Commissioner John Price made clear that the regulator would take action to ensure potential investors are fully informed before making any investment decisions, as ‘any statements made about a potential offer may influence the investment decisions of consumers who will not have the benefit of all material information that would be included in a prospectus’.

So while social media and new technologies might make it tempting to find novel ways to drum up wide-spread investing interest, ASIC’s steps to issue a stop order and media release is a reminder that the pre-prospectus advertising restrictions apply across all communication platforms.