Jun 05, 2024 12:25
A federal court in Australia has favoured Block Earner, a cryptocurrency company, by relieving it from the liability of paying a penalty for offering interest-bearing crypto products without an appropriate licence.
A Regulatory Disappointment?
The judgement today (Tuesday) followed actions by the Australian Securities and Investments Commission (ASIC) against Web3 Ventures Pty Ltd, which operates as Block Earner. The regulator said it is reviewing the decision.
Block Earner offered several cryptocurrency-based fixed-yield earning products, including USD Earner, Gold Earner, and Crypto Earner, collectively known as Earner Products. The company operated as an AUSTRAC-registered digital currency exchange but did not hold an Australian Financial Services (AFS) licence.
According to ASIC, these 'Earner Products' are financial products that fall under managed investment schemes and require proper licensing. It is now seeking declarations, injunctions, and pecuniary penalties.
Block Earner had already ceased offering the Earner products on November 16, 2022, which was less than a month after receiving ASICs initial letter labelling the products as a managed investment scheme and an investment facility. However, the company maintained that it discontinued the product due to commercial reasons.
"From the beginning, it was never our intention to break or circumvent the rules," said Charlie Karaboga, CEO of Block Earner. "As a startup, we did everything within our power to comply, including obtaining legal advice and creating a comprehensive risk framework. While we are obviously disappointed about the findings of contravention in relation to the Earner product, we are pleased that the judge recognized our honest efforts and relieved Block Earner from liability for the penalty.
Courts Mixed Decisions
Interestingly, the Aussie court also agreed earlier this year that Block Earner needed an AFS licence to offer its products. However, the court quashed the regulators allegations of characterising Block Earner's variable yield crypto-asset-based offering as a financial product.
In the latest ruling, the court highlighted that Block Earner acted honestly and not carelessly when it offered the Earner product.
ASIC was seeking a civil penalty of AU$350,000 from Block Earner. However, the crypto business countered in court that no penalty should be awarded, with an alternative proposal of AU$60,000 in penalty, which is three times the benefit the company received from its Block Earner products.
It is appropriate that no penalty be awarded, consistent with my conclusion that Block Earner should be relieved from liability, the judge wrote in the judgement. Even if I had not granted that relief, I would not have awarded any penalty.
This article was written by Arnab Shome at www.financemagnates.com.
World Crypto Global
