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The
Australian Securities and Investments Commission (ASIC) has filed an appeal
against a federal court ruling that absolved cryptocurrency provider Block Earner of paying a penalty for offering unlicensed financial services related
to its digital assets product.
ASIC Appeals Court
Decision Relieving Block Earner of Penalty in Crypto Case
The
Australian regulator announced on Tuesday that it has appealed the Federal
Court’s decision and will continue to seek the imposition of a financial
penalty. In the past, it had requested AU$350,000.
Interestingly,
the Court had
previously found that Block Earner engaged in unlicensed financial services
and operated an unregistered managed investment
scheme from March to November 2022.
Despite
acknowledging the seriousness of Block Earner’s contraventions, the
Court granted relief on June 4, citing among other factors that the company
had acted honestly and not carelessly when it offered the Earner product. ASIC
has challenged this ruling, filing a Notice of Appeal that outlines the grounds
on which it believes the Court erred in granting the relief.
We have appealed the Federal Court’s decision to relieve Block Earner from liability to pay a penalty for contraventions related to its crypto-related Earner product https://t.co/zAzlxNfjqv
— ASIC Media (@asicmedia) June 18, 2024
“From the
beginning, it was never our intention to break or circumvent the rules,” Charlie
Karaboga, CEO of Block Earner, commented after the latest Court’s decision.
“As a startup, we did everything within our power to comply, including
obtaining legal advice and creating a comprehensive risk framework.”
What Now?
Block
Earner, an AUSTRAC-registered digital currency exchange that operates without
an Australian Financial Services (AFS) license, had faced allegations from ASIC
that both its fixed-yield Earner product and its variable-yield Access product
constituted financial products requiring a license.
While the
Court upheld ASIC’s claims regarding the Earner product, it dismissed the
allegations related to the Access product. ASIC has confirmed it will not
appeal the Court’s findings on the Access product.
“Crypto-backed
products should be considered financial products that require licensing under
the law,” Sarah Court, ASIC’s Deputy Chair, commented in February. “Crypto
assets are risky, inherently volatile, and complex. ASIC remains concerned that
consumers do not fully appreciate the risks associated with products involving
crypto-assets.”
The Full
Federal Court will hear ASIC’s appeal on a date yet to be determined. The
outcome could set a precedent for how Australian regulators approach
enforcement actions against crypto firms and the standards to which such firms
are held in complying with financial services laws.
This article was written by Damian Chmiel at www.financemagnates.com.
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