ASX would have hindered a rival's trading system

Fintech CEO iSignthis accused the Australian Securities Exchange (ASX) of abusing its market leading position by trying to delay the launch of ClearPay, a blockchain-based trading system from rival National Stock Exchange of Australia (NSX ).

A public inquiry has opened

A joint venture between iSignthis and NSX, ClearPay uses distributed technology (DLT) to facilitate day-to-day operations and updated accounting between trading participants, the share register and the exchange.

Although it was only publicly disclosed in February, iSignthis and NSX CEO John Karantzis said the news leaked early and led ASX to suspend ISX stock trading on October 2.

Karantzis said that ASX has organized a "public inquiry" on ClearPay and how it would compete with its settlement service, Austraclear, as well as its own DLT-based trading system.

ASX has been working on a DLT-based replacement to invest in its aging compensation system for nearly five years. Although it was originally scheduled for April 2021, the exchange said in late March that it would delay the launch date due to uncertainty caused by the coronavirus.

For its part, ASX said it had suspended iSignthis shares – which had increased tenfold during 2019 – so that it could carry out a review after a group of market research raised concerns about disclosure, governance and the structure of the company's shareholders.

In December 2019, iSignthis initiated legal proceedings against the exchange, arguing that the suspension was illegal. So, this April, he requested an injunction that would prevent ASX from issuing a 41-page report stating that iSignthis had broken the law. But she was rejected by the court.

The report published by ASX

In the report, released April 30, ASX stated that iSignthis has issued 336 million shares, or "milestones", for the directors and executives of the company after signing four unusual contracts, outside of its core business, which are not been made public until long after.

"If ASX were to restore ISX shares in trading now, it would allow holders of Milestone Shares to sell them immediately on the market and to renounce proceeds in circumstances where there are serious questions to answer about the legitimacy of their problem," concludes the report.

In a statement, Karantzis said: "the board of ISX rejects the ASX Statement of Reasons, which it regards as a fundamentally incorrect document that constitutes a series of erroneous conclusions based on incorrectly factual information and assumptions."

The information newspaper CoinDesk asked ASX to comment on Karantzis' new allegations. A spokesman declined to respond to the allegations, but said the exchange was made aware that there was some type of relationship between iSignthis and NSX only in February, more than five months after the suspension of ISX actions.