ASIC takes action against Block Earner for unlicensed conduct over crypto-based products
The Australian Securities and Investments Commission (ASIC) has launched civil penalty proceedings in the Federal Court against fintech company Block Earner alleging it provided unlicensed financial services in relation to its crypto-asset based products and that it operated an unregistered managed investment scheme.
Block Earner offered a range of fixed-yield earning products based on crypto-assets under the names USD Earner, Gold Earner and Crypto Earner (collectively, the Earner Products).
ASIC alleges that the Earner Products were financial products that should have been licensed because the products were a managed investment scheme, a facility through which a person makes a financial investment, and/or a derivative.
The regulator is seeking declarations, injunctions, and pecuniary penalties from the Court.
Block Earner is the trading name of Web3 Ventures Pty Ltd. It does not hold an AFS licence. It is an AUSTRAC-registered digital currency exchange.
Block Earner has been an authorised representative of Flash Partners Pty Ltd since 1 August 2022. This authorisation does not relate to the Earner Product.
Entities providing services in relation to crypto-asset-related products should be aware that some such products may be financial products.
A range of Australian laws apply to entities giving advice, dealing, providing insurance, or providing other intermediary services for crypto-assets that are financial products. These include the requirement to hold an AFS licence or appropriate authorisation by an AFS licence holder.
ASIC has also taken other recent action to protect investors from harms posed by crypto-asset offerings.
In October, ASIC commenced civil penalty proceedings against BPS Financial Pty Ltd over allegedly misleading statements made in relation to its crypto asset Qoin.