The Australian Securities and Investment Commission Takes Legal Action Against Unlicensed Crypto Companies
The Australian Securities and Investment Commission (ASIC) has initiated legal proceedings against two cryptocurrency companies and their directors for operating without a license in the country. The companies were allegedly involved in a complex scheme that led to the loss of AU$160 million from investors.
ASIC’s Actions Against Unlicensed Mining Companies
The ASIC has filed civil proceedings against the NGS Group companies and their directors, Brett Mendham, Ryan Brown, and Mark Ten Caten. These companies include NGS Crypto, NGS Digital, and NGS Group, which are all blockchain crypto mining firms.
- ASIC alleges that the NGS companies targeted Australian investors for blockchain mining packages with fixed-rate returns.
- The companies are accused of promoting the use of self-managed super funds (SMSFs) by investors to convert their money into cryptocurrency.
Company Background & Allegations
The NGS Crypto company was established in 2018 as a blockchain firm under the NGS Group, aiming to generate consistent returns for its members. However, ASIC claims that these financial services were offered without the necessary licensing, leading the regulator to seek injunctions against the NGS companies.
Regulatory Warnings and Actions
ASIC Chair Joe Longo has cautioned Australian users about the risks of self-managing SMSFs and investing in crypto-related products like those provided by the NGS Group without proper regulatory oversight. The regulator’s actions aim to protect consumers and ensure compliance within the industry.
According to Longo, these proceedings are a signal to the crypto industry that ASIC will continue to scrutinize products to safeguard consumers and ensure regulatory compliance.
Crypto Funds Under Investigation for Irregularities
Separately, over 100 investors are owed more than AUD$100 million by the collapsing DCA Capital, Digital Commodity Assets, and the Digital Commodity Assets Fund, managed by Ash Balanian, a former NASA mission scientist.
- The funds targeted wealthy investors with a minimum deposit requirement of AU$50,000.
- Investors raised concerns about irregularities in fund management, leading to regulatory intervention.
Investor Concerns and Legal Actions
Investors discovered that the funds lacked the necessary licenses and breached managed investment scheme requirements, prompting the Australian Federal Court to freeze Balanian’s assets worth AU$55 million and restrict his travel by seizing his passport.
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