Nasdaq Stockholm’s Disciplinary Committee released a statement today on the decision which found that Swedish domiciled XBT Provider AB (XBT Provider) breached Nasdaq Stockholm’s Rule Book for Issuers of warrants and certificates and other regulations in several respects and, accordingly imposed a fine on XBT amounting to SEK 1,000,000, approximately $122,270 USD.
XBT Provider manages Bitcoin Tracker One and Bitcoin Tracker Euro. With these instruments, anyone can invest in Bitcoin as ETNs, exchange-traded notes.
It is reported that XBT Provider has not complied with the internal routines and procedures supplied to Nasdaq in connection with its application by:
- failing to ensure that the risk function reports to the Board
- failing to implement an audit of the company’s internet and IT security
- failing to manage a significant change in operations in accordance with the Internal Rule Book; and
- failing to ensure that the regulatory compliance function monitored and controlled the company’s compliance with applicable legislation and the Internal Rule Book or reported to the Board in accordance with the Internal Rule Book.
XBT Provider has thereby acted in breach of the conditions in the exchange’s decision to grant an exemption from the requirement of Section 2.1 in the Rule Book that, to be approved, an issuer shall be a credit institution or a securities company with a permit from the Swedish Financial Supervisory Authority or equivalent authority within the EEA.
XBT has breached Sections 4.1 and 4.2 in the Rule Book by failing to publish information in the form of a press release through a news distributor and by the company’s selective disclosure of information covered by the disclosure requirement.
XBT has, by failing to have documents that the company identified by reference in the base prospectus and documents that are to be available to view on its website during the entire term of the base prospectus, breached Article 28.5 of the Prospectus Regulation and Chapter 2, Sections 20 and 29 of the Financial Instruments Trading Act (FITA).
According to the Disciplinary Committee, XBT has also breached Section 2.3 of the Rule Book and Chapter 16, Section 4 of the Securities Market Act when the Company failed to publish its Annual Reports for 2015 and 2016 within the prescribed and statutory time, and breached Section 2.3 of the Rule Book when the company failed to publish an interim report for the first six months of 2015 on its website before the exchange pointed this out.
Finally, XBT has, in the light of the misdemeanors above, breached Section 2.2 of the Rule Book, which states that a company shall possess requisite routines for reporting and monitoring that ensure the company fulfills applicable legislation and the Rule Book and has secure technical systems.
XBT Provider immediately released the following response:
The Board of Directors of XBT Provider AB (the Issuer) accepts, on behalf of the Issuer, the findings of the Disciplinary Committee of Nasdaq Stockholm in its decision of July 23rd, 2017 and referenced in today’s release.
The Board wishes to stress that the substantial majority of the infractions to which the decision related occurred within 2015 and the first six months of 2016, which was prior to the acquisition of the Issuer’s group by the Global Advisors group (the most prominent former owner being, at the time of such acquisition, in bankruptcy). The Board regrets that Nasdaq’s release of July, 27th 2017 did not more prominently highlight the period in which the infractions occurred.
Since acquisition by the Global Advisors group an entirely new management team has been put in place, a major and comprehensive remediation project has been completed and the Issuer’s assets under management have grown ten-fold. Additionally, no personnel from the period prior to Global Advisor’s acquisition remain engaged by the Issuer.
The Board is gratified that the Disciplinary Committee recognized within its decision both that the course of events concerning the substantial majority of the infractions was not within the control of the Issuer’s new owners, as well as the improvements which have subsequently been made under the stewardship of Global Advisors.
Although disappointed by the fine imposed (equivalent to approximately 90,000 GBP or 120,000 USD) and the duration of the investigation which culminated in the decision, the Board will arrange for its prompt settlement from the Issuer’s reserves. Upon such settlement, the Board considers this matter to be comprehensively resolved.
The Board wishes to reassure the holders of the Issuer’s listed certificates that:
- there will be no prejudice whatsoever to them as a result of the fine which has been imposed; and
- the Issuer’s current operations and ambitious business plans for the future will not be compromised or amended as a consequence of the Decision and the associated fine.
The Issuer is pleased to confirm that it has extensive plans to expand its current product offerings of digital-asset certificates and continues its mission to lead in the professionalization of the cryptocurrency and blockchain markets.
“Our mission as a group is to help drive the development and professionalisation of bitcoin and cryptocurrencies as an asset class. For the sake of investors in the listed certificates and the bitcoin community at large, we are very fortunate that Global Advisors had the opportunity to turn around the management and professionalize the operations of the world’s only exchange-traded bitcoin product.”
XBT Provider said they are committed to maintaining the highest standards of compliance with all applicable regulatory requirements and looks forward to a continuing productive and collaborative relationship with Nasdaq Stockholm.