The Australian Securities Exchange (ASX) has launched a probe into an IT firm behind a listed penny stock seeking to raise $15 million via an initial coin offering (ICO) for the launch of a cryptocurrency exchange.

Called Byte Power Group (BPG), the public firm issued a statement on Wednesday with answers to a total of 17 questions raised by the ASX requiring the firm to provide details on its intended token sale, disclosed on July 19.

Based on a release at the time, BPG aims to issue a total of 1 billion Byte Power X Loyalty Tokens (BPX Tokens) and plans to sell 25 percent of the amount to private investors at a price of US$0.06 per unit.

The goal is to raise as much as $15 million for the firm to fund the launch of the exchange, where the BPX Tokens can be further traded and used to offset transaction fees. The remaining 75 percent will be allocated for “pre-registered users of the exchange, company special releases, pre-opening and future marketing drive,” according to the plan.

As BPG aims to become the first publicly traded company in Australia to launch a cryptocurrency exchange via the ICO funding model, the move sparked concerns from the ASX over whether it is “in compliance with the ASX Listing Rules.”

On Aug. 1, the ASX’s compliance team sent a letter to BPG, requiring the firm to justify the legality of the planned operation, listing the 17 questions that asked about the status of the ICO, whether it had obtained any legal advice and more.

In today’s written response, BPG said it had already started selling the tokens to private investors in Australia and Singapore with a plan to further roll out the scheme in Hong Kong. It has not responded to a CoinDesk enquiry on how much it has raised so far, or whether any of the 75 percent of the total tokens would be further sold to investors.

In both of the jurisdictions in which it has started selling tokens, BPG claimed it received legal advice that the tokens are not deemed as securities, claiming they are not regulated as a financial product under the Corporations Act of Australian law.

As previously reported by CoinDesk, the Australian Securities and Investments Commission (ASIC) issued regulatory guidance for ICOs in September 2017.

The financial watchdog said at the time ICOs that offer financial products should be regulated under the Corporations Act and gave further details on how it defined such financial products, stating:

“If the value of the digital coins acquired is affected by the pooling of funds from contributors or use of those funds under the arrangement, then the ICO is likely to fall within the requirements relating to MISs [managed investment schemes]. This is often the case if what is offered through the ICO has the attributes of an investment.”

As of press time, the ASIC has not responded to CoinDesk’s request for comment on the BPG case.

It now remains to be seen how the ASX will respond to the letter and whether it will take any action over the listed firm’s ICO activity.

Australian dollar image via Shutterstock