ASX shareholder seeks to sue former directors over failed blockchain project

A shareholder, Rosherville Pty Ltd, is seeking Federal Court permission to launch a statutory derivative action against former officers and directors of the Australian Securities Exchange (ASX). The proposed lawsuit alleges breaches of duty related to the failed blockchain-based overhaul of the Clearing House Electronic Subregister System (CHESS).

The CHESS replacement project, which began in 2016, was intended to modernize Australia’s share settlement infrastructure using distributed-ledger technology. However, the project was paused in November 2022 following an independent review by Accenture that identified significant design and delivery issues. ASX formally abandoned the blockchain approach in May 2023.

This legal move follows regulatory scrutiny, including a $14.4 million penalty imposed on ASX for misleading conduct regarding the project's progress. While the shareholder seeks to hold former leadership accountable for the costly fintech failure, ASX stated there are no allegations directed at the exchange itself.