Corporate

Court Dismisses Part of ASIC Case Against Block Earner Products

09 Feb 2024
Federal Court of Australia judgment delivered in Australian regulator ASIC’s case vs Crypto Startup Block Earner.
Australia, February 9th, 2024: In a landmark decision, the Federal Court of Australia delivered judgment in proceedings brought by the Australian Securities and Investment Commission (ASIC) against Block Earner, a Sydney-based crypto start-up.
The Court's decision carries nuanced implications for Block Earner and the broader crypto industry in Australia. The decision provides guidance to the industry as to the applicability of Australian financial services laws to crypto-related products and services.
The judgment of Justice Ian Jackman dismissed ASIC’s allegations relating to Block Earner’s DeFi “Access” service. The judgment found that Block Earner did not breach financial services laws by providing Access. The Court found that the Access service is not a financial product and did not involve unlicensed financial services conduct, allowing Block Earner to continue offering this key component of its services. The result reinforces Block Earner's standing in the industry as a provider of decentralised finance (DeFi) solutions.
The Court found that Block Earner's fixed-yield "Earner" service, which Block Earner voluntarily withdrew in November 2022, was an unregistered managed investment scheme and an investment facility, and accordingly the company engaged in unlicensed financial services conduct for this product. Block Earner no longer provides Earner.
Regulatory Clarity for DeFi and the Crypto Industry:
DeFi has become a focal point within the crypto space, promising to revolutionise the way customers can transact (including by borrowing and lending). The dismissal of ASIC’s case against Access is an important development in showing how DeFi can coexist with Australia’s regulatory frameworks, paving the way for further development and adoption of DeFi solutions.
Maintaining Regulatory Compliance:
Block Earner, in its official statement, emphasised its commitment to complying with regulatory obligations while providing everyday Australians with access to the benefits of DeFi. This commitment reflects the delicate balance that innovative companies must strike between pushing boundaries and operating within established legal frameworks.
Conclusion:
Block Earner can continue offering Access, and the case provides guidance for other crypto businesses seeking to comply with the Australian financial services regulatory landscape. As the industry grapples with the need for clear guidelines, this case highlights a positive step forward. The Court's findings that Block Earner's Access service did not breach relevant financial services laws provides a glimpse into a future where DeFi can thrive within the existing regulatory landscape, fostering further innovation and positive change in the crypto space.
About Block Earner:
Block Earner is an Australian based FinTech powered by blockchain technology. We’re on a mission to provide a user-friendly interface for everyday Australians to access the benefits of decentralised finance. Providing more freedom for how their money is stored, moves, and grows. Block Earner is a digital asset provider, with digital vaults secured with Fireblocks, an ISO and SOC2 certified asset custodian.
ENDS
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