Block Earner Requires Crypto Product Financial License: Court

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.

The Federal Court finds fintech company Block Earner engaged in unlicensed financial services conduct when offering its crypto-backed Earner product

— ASIC Media (@asicmedia) February 9, 2024

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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2024-02-09 13:08