Australian Federal Court has ruled against the Australian Securities and Investments Commission (ASIC). Fintech firm Block Earner has been relieved of paying a hefty fine urged by the securities regulator.
Block earner was sued by ASIC in November 2022. The regulator had initiated civil legal proceedings against the firm for its crypto-linked fixed-yield earning products.
It claimed Block Earner offered its service without acquiring an Australian Financial Services (AFS) license.
Background on Block Earner ASIC penalty dispute
On Feb. 11, the Australian Federal Court ruled in favour of the commission. The court found the fintech firm’s “Earner” product was in violation of the Corporations Act 2001.
The products, named “Crypto Earner,” “USD Earner”, and “Gold Earner,” offered yields through users depositing Australian dollars and converting them to required crypto assets.
These assets would then be lent on defi protocols like Aave and Compound Finance to generate yield.
Now, per a June 4 ruling, Justice Ian Jackman has dropped the expected penalty. This is despite the firm being found guilty of the charges against it.
According to the court, the accused had “acted honestly.”
Block Earner reportedly considered getting a license when launching the “Earner” product. However, the firm’s research and legal team had suggested that it wouldn’t be necessary.
The securities regulator was looking for a $234,000 (350,000 Australian dollars) fine. Block Earner countered this by requesting a fine of $40,000 (60,000 Australian dollars) penalty.
ASIC was expecting the penalty to be three times what Block Earner earned from its offerings. It is currently reviewing the decision, as per a June 4 release.
Going after unlicensed entities
The commission has a history of countering the court’s decision. Earlier this year, ASIC challenged the federal court regarding its decision to drop the lawsuit against Finder Wallet Pty Ltd.
ASIC sued Finder Wallet in December 2022, a month after Block Earner. Similar to Block Earner, the securities watchdog claimed Finder wallet’s Finder Earn program was unlicensed.
However, on March 14, 2024, the court ruled that ASIC has not established that the Finder Earn product is a debenture” under the nation’s Corporations Act.
Australia’s securities watchdog has been going after the nation’s crypto industry ever since it sued Australian firm BPS Financial Pty Ltd (BPS).
Back then, the regulator had warned that it was targeting “unlicensed” and “misleading” crypto-based offerings.
Amidst this backdrop, Australia’s Treasury has been working on regulations for licensing and custody rules for crypto asset providers. The framework is expected to be ready by 2024.
Once applicable, the related platforms would have 12 months to transition to the new regime.
The post Australian court excuses Block Earner’s $230k penalty in crypto yield case appeared first on Invezz
