The Australian Securities and Investments Commission (ASIC) has won a court case against crypto startup Block Earner. The Federal Court of Australia found that the crypto company was in breach of the 2001 Corporations Act for offering financial services without a licence.

Judge Ian Jackman found defendants guilty of “operation of unregistered management investment scheme in contravention” and “carrying on financial services business without an Australian Financial Services Licence.”

ASIC was pursuing legal action against Web3 Ventures Pty Ltd, which operates as Block Earner, for alleged breaches of the Act in connection with two of its products, named “Earner” and “Access”.

Court’s Mixed Verdict on Crypto Products

Block Earner, distinguishing itself from typical crypto exchanges and apps, attempted to connect investors with leading decentralised finance (DeFi) lending protocols, offering returns for “staking” a stablecoin. This move beyond simply facilitating the purchase and sale of cryptocurrencies included offering fixed-yield earning crypto products, which the court found should have been registered as a managed investment scheme.

The legal dispute focused on whether the Earner and Access products qualify as “financial products” under the law. ASIC argues that they are, identifying them as either managed investment schemes, facilities for making financial investments, or derivatives.

The court agreed with ASIC that “Earner” contravened sections 601ED and 911A of the Corporations Act, but failed to do so for “Access.”

Penalties in the case are yet to be decided and a future hearing, which has not been scheduled yet.

The post Breaking: ASIC Wins Lawsuit Over Crypto Startup Block Earner appeared first on Crypto News Australia.

Filed under: Bitcoin - @ February 9, 2024 2:06 am