Corporate
ASIC Legal Action Against Block Earner
21 May 2025
21 May 2025
Block Earner will always seek to engage in a collaborative process with regulators that brings about positive change and provides clear benefits to Australian consumers. We want to help build the framework that supports long-term consumer and market confidence.
Since November 2022, Block Earner has responded to ASIC proceedings about two of its products, Access and Earner. We voluntarily closed the Earner product in November 2022 and on 23 April 2025, the Federal Court of Australia overturned the previous findings from 4 June 2024 and dismissed ASIC proceedings against Block Earner.
In May 2025, ASIC filed an application for special leave to appeal to the High Court of Australia.
We note ASIC’s application to the High Court and, as outlined in their submission, that this matter now relates to a broader legal question around the definition of a financial product, which extends well beyond Block Earner and the crypto sector.
We believe the Full Federal Court’s April ruling was a strong and well-reasoned decision that upheld the integrity of our operations. We remain confident in the soundness of that judgment and will respond to ASIC’s application through the appropriate legal channels.
Block Earner continues to operate business-as-usual and remains fully committed to compliance, innovation, and building products that benefit Australian consumers.
Sequence of Events
20 May 2025
ASIC filed an application for special leave to appeal to the High Court of Australia, specifically challenging the Federal Court’s finding that the Earner product was neither:
a). A financial investment facility under s 763B, nor
b). A derivative under s 761D.
23 April 2025
- The Federal Court of Australia handed down its decision, finding that:
- The ASIC appeal be dismissed.
- The Block Earner cross-appeal be allowed.
- The declarations of contravention made by the primary judge be set aside.
- The proceeding be dismissed.
- ASIC pay Block Earner’s costs
The critical elements of the decision were:
- Block Earner’s customers loaned cryptocurrency under fixed terms, receiving interest in return. There was no pooling of contributions for the purpose of generating financial benefits for members, which is essential for a managed investment scheme.
- Customers had no exposure to Block Earner’s business performance, nor rights to returns beyond the agreed interest.
- Block Earner’s terms clearly stated it could use funds at its sole discretion, and customers had no intention or expectation of benefiting from those uses.
- ASIC’s reliance on early marketing FAQ language was insufficient to override the contractual structure created by the terms to which customers agreed, which clearly framed the product as a loan, not a financial investment or scheme.
This decision also confirms that Block Earner is under no obligation to pay any penalties, and that the Earner product did not fall within the scope of financial product regulation.
6 March 2025
The Court hearing is to determine whether the original findings on liability and penalty should be upheld, overturned, or varied.
9 July 2024
- Block Earner filed a notice of cross-appeal, disputing the Federal Court’s finding that Earner was a managed investment scheme and an investment facility. Block Earner argues that:
- Earner was a lending arrangement, not an investment scheme, as customers loaned crypto to Block Earner under fixed terms rather than contributing to a pooled investment.
- ASIC’s findings relied partly on historical marketing materials on the website, which did not accurately reflect the product’s legal structure.
- The Corporations Act’s regulatory framework was not designed for loan-based crypto products, and the court misapplied the definitions of investment products.
18 June 2024
- ASIC announced it would appeal the Federal Court's decision to relieve Block Earner from paying a penalty for the contraventions related to unlicensed financial services when offering its crypto-related Earner product.
- ASIC argued that financial penalties were necessary to deter similar conduct in the financial services sector and that Block Earner had still engaged in unlicensed financial activities.
4 June 2024
- In a subsequent ruling, the Federal Court acknowledged the seriousness of Block Earner's contraventions of the Corporations Act but relieved the company from paying a penalty.
The Court noted that:
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Block Earner had acted honestly and had sought legal advice before offering the Earner product.
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This reflected the lack of clear regulatory guidance on crypto-lending products at the time.
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Block Earner had made a modest profit ($21,309.60) from the Earner product, and the Court determined that declarations of contravention provided sufficient deterrence.
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Additionally, the Court criticised an ASIC media release from February 2024 as "misleading and unfair," as it implied that Block Earner required an AFSL at the time of judgement, despite the product being withdrawn in November 2022.
9 February 2024
- The Federal Court found that Block Earner's Earner product constituted a managed investment scheme and an investment facility under the Corporations Act 2001 (Cth).
- This meant that Block Earner was found to have operated an unregistered managed investment scheme and provided unlicensed financial services from March to November 2022.
- However, the Court dismissed ASIC's claims against the Access product, determining it was not a financial product and did not require an AFSL.
November 2022
- ASIC commenced proceedings against Block Earner in the Federal Court, alleging that the company offered financial products without holding an Australian Financial Services Licence (AFSL).
- The products in question were Earner, a fixed-yield lending product, and Access, which facilitated user interaction with decentralised finance (DeFi) protocols.
Block Earner voluntarily closed its Earner product in Nov 2022.
