The Federal Court has found that Finder Wallet Pty Ltd did not provide unlicensed financial services in relation to crypto-asset related product Finder Earn.
ASIC alleged that the Finder Earn product was a debenture. This is because customers deposited money with Finder Wallet on the understanding that their money would be repaid, together with a return for allowing Finder Wallet to use their capital. The Court rejected this contention and found the product was not a debenture.
ASIC Executive Director Enforcement and Compliance Tim Mullaly said, ‘ASIC pursued this matter because we considered that this product was being offered without the appropriate licence or authorisation and therefore without the benefit of important consumer protections.’
ASIC will consider the judgment carefully. ASIC has 28 days to lodge any application for appeal to the Full Federal Court.
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Background
Finder Wallet is an AUSTRAC-registered Digital Currency Exchange.
Entities providing services in relation to crypto-related products should be aware that such products may be financial products. ASIC Information Sheet 225: Crypto Assets provides guidance on the circumstances in which a crypto-related offering may be a financial product.
A range of Australian laws apply to entities giving advice, dealing, providing insurance, or providing other intermediary services for crypto-assets that are financial products. These include the requirement to hold an AFS licence or appropriate authorisation by an AFS licence holder.
ASIC has taken recent action to protect investors from harms posed by crypto-asset offerings.
On 9 February 2024, the Federal Court found that Block Earner engaged in unlicensed financial services conduct when offering its crypto-backed Earner product (24-019MR).
In September 2023, fintech company Bobbob Pty Ltd paid penalties of $53,280 to comply with ASIC infringement notices regarding representations it made about a crypto-asset linked investment product (23-261MR).
On 25 October 2022, ASIC commenced civil penalty proceedings against BPS Financial Pty Ltd regarding allegedly misleading statements made in relation to its crypto-asset Qoin. The trial in this matter was held on 16-19 October 2023 and judgement has been reserved (22-287MR).
ASIC’s Moneysmart website has information for consumers about the risks of investing in crypto-assets.