ASIC to appeal Finder crypto decision

ASIC federal court crypto-asset cryptocurrency finder

11 April 2024
| By Laura Dew |
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ASIC has announced it will appeal the Federal Court’s decision to dismiss proceedings against Finder regarding a crypto-asset product. 

In March, ASIC lost a case against Finder regarding whether its product Finder Earn was a financial product which would mean Finder had been providing unlicensed financial services. It was also concerned Finder had breached product disclosure requirements and failed to comply with design and distribution obligations (DDO) in relation to Finder Earn.

Between February and November 2022, ASIC alleged Finder Earn customers deposited Australian dollars into their accounts, which were then converted to an Australian dollar-denominated “stablecoin” called TAUD and allocated to Finder Wallet to use for its own working capital. Finder Wallet paid customers (in Australian dollars) an annual compounding return of either 4.01 per cent or, in some circumstances, 6.01 per cent, in exchange for the use of their funds by Finder Wallet.

The product was sunsetted by Finder in November 2022 and all customer capital was returned.

However, the court ruled the product was not a debenture and Finder had not contravened the law, therefore dismissing the proceedings.

“ASIC has not established that the Finder Earn product is a debenture within the meaning of s9 of the Corporations Act. As each of the contraventions of the Corporations Act alleged by ASIC is predicated on establishing that the Finder Earn product is a debenture, those contraventions cannot be made out,” Justice Brigitte Markovic said in her judgment.

The regulator has since announced that it has decided to appeal the court’s decision as it remains concerned about consumer protection.

“ASIC has appealed this decision because it is concerned that the Finder Earn product was offered without the appropriate licence or authorisation and therefore without the benefit of important consumer protections.”

A date is yet to be set to hear the appeal.

Earlier in the year, ASIC won a case against fintech company Block Earner, with the Federal Court finding Block Earner, described as a digital currency exchange, engaged in unlicensed financial services conduct and operated an unregistered managed investment scheme when offering its crypto-backed product called Earner. 

However, ASIC was unsuccessful in its allegation that Block Earner’s variable yield crypto asset based offering – known as the Access Product – was a financial product. It was marketed as giving consumers access to decentralised finance lending, which ASIC considered to be a financial product, but the court disagreed.

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