Australia’s Full Federal Court has overturned a decision by a lower court against Block Earner and ruled that the crypto company did not require a financial services licence to offer its digital asset-related ‘Earner product’.
“The ruling overturns the Federal Court’s original decision that Block Earner’s Earner product was a financial product,” the Australian Securities and Investments Commission (ASIC) noted in its announcement yesterday (Tuesday).
A Successful Appeal by the Crypto Firm
The latest ruling followed Block Earner’s successful appeal against the finding that the Earner product was a financial product. Last year, an Australian Federal Court ruled that Web3 Ventures Pty Ltd, operating under the tradename Block Earner, had offered crypto products without obtaining the necessary financial services licence.
Block Earner offered the ‘Earner’ product, which allowed its users to earn fixed-yield returns from various crypto-assets. The company operated between March 2022 and November 2022.
The ruling came after ASIC took action against the company in November 2022, alleging it had provided unlicensed financial services through its cryptocurrency offerings and was operating an unregistered managed investment scheme.
However, the court dismissed ASIC’s allegations that Block Earner’s variable-yield, crypto-asset-based offering constituted a financial product. Although the product gave users access to decentralised finance lending protocols, the regulator had classified it as a financial product due to its similarities to a managed investment scheme, investment facility, or derivative.
No Penalty
ASIC also appealed the Federal Court’s earlier decision that released Block Earner from liability for offering unlicensed services. However, the Full Federal Court has now dismissed ASIC’s efforts to impose penalties.
Block Earner does not hold an Australian Financial Services licence but is registered with AUSTRAC as a digital currency exchange. It offered several cryptocurrency-based fixed-yield earning products, including USD Earner, Gold Earner, and Crypto Earner, collectively known as the Earner Products.
The action against Block Earner marked ASIC’s first enforcement action of this nature against a crypto firm. The regulator also fined the local operator of Kraken AU$8 million (approximately US$5.1 million) for illegally offering margin products to more than 1,100 customers in the country. Similarly, eToro is another platform currently facing legal challenges.
This article was written by Arnab Shome at www.financemagnates.com.
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