Australian Court Rules in Favor of ASIC in Legal Battle with Block Earner
An Australian court has ruled in favor of the Australian Securities and Investments Commission (ASIC) in a legal dispute involving the crypto startup Block Earner. The court found that Block Earner violated the Australian Corporations Act by offering an unlicensed financial product, which is a breach of sections 601ED and 911A of the Act.
ASIC Emerges Victorious
The recent legal battle between ASIC and Block Earner has resulted in a victory for ASIC. The court determined that Block Earner’s product offering violated Australia’s Corporations Act, specifically sections 601ED and 911A. Judge Ian Jackman ruled that Block Earner operated without the necessary Australian financial services license, thus breaching the Act. Additionally, the company was found to have run an unregistered managed investment scheme related to its product.
ASIC’s Request for an Order
In its judgment issued on Jan. 31, ASIC requested an order against Block Earner’s “Earner” and “Access” products. While the “Access” product is still available, the “Earner” product was discontinued in November 2022. ASIC argued that both products qualify as financial products resembling a managed investment scheme and that Block Earner violated relevant sections of the Corporations Act by not having an Australian Financial Services Licence (AFSL).
Judge Rules in Favor of ASIC
After considering arguments from both ASIC and Block Earner, Judge Ian Jackman ruled in favor of ASIC. He concurred with ASIC’s assertion that violations of sections 601ED and 911A of the Act had been demonstrated regarding the “Earner” product. However, he noted that ASIC did not substantiate similar allegations concerning the “Access” product. This marks ASIC’s first successful legal action against a crypto company.
ASIC’s Focus on Consumer Protection
In September 2023, ASIC announced a four-year plan to enhance consumer protection against digital scams, including those related to cryptocurrencies. The agency aims to shield vulnerable consumers and small businesses from fraudulent activities. This strategic move follows a year of progress in achieving ASIC’s key objectives.
Penalties for ME Bank and AFS Licensees
ME Bank was sentenced for providing false and misleading information to its home loan customers and failing to inform them about changes in interest rates and repayment amounts. The Federal Court imposed a penalty of $820,000 on ME Bank for these breaches. In a separate incident, AFS licensees were required to register their financial advisers by a specified deadline, with ASIC urging compliance through ASIC Connect.
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