The Australian Securities and Investments Commission (ASIC) ruled that fintech company Block Earner engaged in unlicensed financial services conduct when offering its crypto-backed “Earner” product between March 2022 and November 2022.
Operating under the trading name Web3 Ventures, Block Earner allowed consumers to earn fixed yield returns from different crypto-assets. However, the company did not hold an Australian financial services license, according to ASIC.
ASIC Deputy Chair Sarah Court stated this was an important decision, clarifying that crypto-backed products meeting the definition of a managed investment scheme or financial investment facility require licensing under the law.
The regulator said Block Earner operated an unregistered managed investment scheme and provided unlicensed financial services, deemed a financial product through its Earner product.
The court added that crypto-assets are inherently risky and complex, and ASIC remains concerned about inadequate consumer protections. Firms must ensure appropriate licensing before distributing crypto-based financial products.
However, ASIC was unsuccessful in alleging Block Earner’s separate Access Product for earning yields from decentralized finance protocols was a financial product. The Court did not accept this characterization.
ASIC now intends to seek pecuniary penalties from the Court. The proceedings are scheduled for a case management hearing on March 1st, 2024.
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