The Federal Court of Australia has freed Block Earner from paying a penalty for offenses related to unlicensed financial services when it offered its crypto-related Earner product.
The Court held that Block Earner’s violations were serious. However, the Court relieved Block Earner of liability to pay a fine on the basis, among other things, that it acted honestly and not recklessly in offering the Earner product.
ASIC took this case because it was concerned that Block Earner was offering the Earner product without an Australian financial services licence, leaving consumers without important protections. Just because a product is based on a crypto-asset does not mean it is exempt from financial services legislation.
On 9 February 2024, the Court found that from March to November 2022, Block Earner had provided financial services without a license and operated an unregistered managed investment scheme when it offered the Earner fixed income product.
ASIC is reviewing the decision.
Block Earner is the trading name of Web3 Ventures Pty Ltd. It is an AUSTRAC registered digital currency exchange. It does not hold an Australian Financial Services License (AFS).
A number of Australian laws apply to entities that advise, deal, provide insurance or other intermediary services in relation to crypto-based products that are financial products. These include the requirement to hold an AFS license or appropriate authorisations.