More than one-quarter of iSignthis’ revenue generated during the June 2018 half-year came from two customers, which the Australian Securities and Investments Commission (ASIC) is currently trying to have liquidated due to “unconscionable” conduct.
Following volatility in its share price, Payments and identity verification technology company iSignthis Ltd is currently in the midst of a trading suspension, while the Australian Stock Exchange (ASX) and the Australian Securities and Investments Commission (ASIC) complete their inquiries as to the nature of its revenue and contracted service fee revenue.
On Monday, the fintech company had its responses to a 17-question examination by the stock exchange, which included questions about its customers, market disclosures, and sources of revenue, published.
Looking at the questions, it appears the ASX is particularly concerned with the company’s financial performance during the June 2018 half financial performance. During this period, solid revenues resulted in all 336 million of iSignthis’ performance shares being released. At their peak this year, the shares were valued up to $500 million.
In regards to revenue, the company’s response shows that OT Capital and TraderQ - two alleged foreign exchange (Forex ) and CFD traders which ASIC has gone to court to get liquidated - accounted for 25.9 percent of its contracted service fee revenue for the six months to June 30, 2018.
Response from iSignthis CEO
John Karantzis - CEO of iSignthis
Speaking to Finance Magnates John Karantzis, the CEO of iSignthis, said that while the company did provide payment processing services to the entities, it only did so when they were duly licensed by ASIC. As soon as the company received a “stop” order from ASIC, iSignthis ceased processing payments immediately.
“We rely upon ASIC, as the regulator, to ensure that market participants are acting in accordance with regulations. We are not the regulator, and are not in a position to monitor activities of our customers, nor can we act in any enforcement capacity,” Karantzis continued.
“As a service provider, we are not privy to the Companies operations, and we provide a service based upon good faith, the fact that the ASIC licenses are current, and our own customer due diligence. As such, if a company is acting properly or improperly is not something that we can ascertain as a payments service provider (any more than say their landlord or their hosting provider etc could)."
“However, we are positive regarding the CFD, FX and Binary sector in Australia, and will continue to support and provide payment services to ASIC licensed AFSL holders.”
In its responses, iSignthis also admitted that the transaction turnover figures the company used last year were actually based on “clients’ estimates” of turnover they expected to generate by using the fintech’s services, and iSignthis’ assessment of how “plausible” the estimates were.
This year, the company has since changed its reporting to "actual annualised gross processing turnover value (GPTV)" instead of using terms such as contracted GPTV.
