ASIC Appeals Dismissal of Case Against Crypto Firm Finder Wallet

ASIC has cancelled the Australian financial services licence of JB Markets Pty Ltd, citing the firm's inability to meet capital and resource requirements.

Key Insights

  • ASIC has appealed a Federal Court decision that dismissed its case against crypto firm Finder Wallet over the company’s “Finder Earn” crypto-asset product.
  • ASIC alleges the Finder Earn offering was an unlicensed financial product
  • The appeal will be heard by the Full Federal Court

SYDNEY (MarketsXplora) – Australia’s corporate watchdog is challenging a court’s decision to dismiss its civil proceedings against crypto platform Finder Wallet over alleged unlicensed financial services conduct related to its “Finder Earn” crypto-asset product.

The Australian Securities and Investments Commission (ASIC) has lodged an appeal with the Full Federal Court, arguing that the Finder Earn product offered by Finder Wallet’s subsidiary should have been subject to important consumer protections as it constituted a regulated financial product.

The federal court had earlier ruled in favor of Finder Wallet, disagreeing with ASIC’s allegation that the Finder Earn product amounted to an unlicensed debenture.

“ASIC is concerned that the Finder Earn product was offered without the appropriate license or authorization, and therefore without the benefit of important consumer protections,” the regulator said in a statement.

The appeal will be heard by the Full Federal Court at a date yet to be determined.

Finder Wallet, a subsidiary of the prominent financial comparison website, had offered the Finder Earn product between February and November 2022. The product allowed users to deposit Australian dollars, which were then converted to a stablecoin called TAUD and allocated to Finder Wallet.

Customers received their Australian dollars back when exiting the product, with Finder Wallet paying annual compounding returns of either 4.01% or 6.01% in exchange for using the deposited funds.

However, ASIC alleged that Finder Wallet had breached financial services licensing requirements, product disclosure obligations, and design and distribution rules in relation to the Finder Earn offering.

After being notified of ASIC’s concerns, Finder Wallet ceased offering the Finder Earn product in November 2022 and returned all customer funds in full.

The federal court dismissed ASIC’s civil penalty proceedings against Finder Wallet in March 2024, ruling that the Finder Earn product did not constitute a regulated debenture as alleged by the regulator.

But ASIC remains unconvinced, arguing that crypto-related products like Finder Earn may still be deemed financial products that require appropriate licensing and consumer safeguards.

“Entities providing services in relation to crypto-related products should be aware that such products may be financial products,” ASIC said, citing its existing guidance on the regulatory status of crypto assets.

The appeal comes amid ASIC’s heightened scrutiny of the crypto industry, with the regulator recently taking enforcement action against other firms over alleged unlicensed financial activities.

In February 2024, the Federal Court found that crypto platform Block Earner had engaged in unlicensed financial services conduct. ASIC also has an ongoing case against BPS Financial regarding allegedly misleading statements about its crypto-asset Qoin.

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