Highlights:
- ASIC sought a AU$350,000 penalty from Block Earner, but the company argued against it, proposing a AU$60,000 penalty instead.
- The court rebuked ASIC for releasing a misleading media statement, following a ruling by Judge Ian McNeil Jackman in February regarding Block Earner’s unlicensed “Earner” product.
- But, the Federal Court ruled that Block Earner wouldn’t face penalties for rule violations related to its crypto-related Earner product, despite serious actions.
In a recent decision, the Federal Court decided that Block Earner would not have to pay a penalty for breaking rules. Speculations mounted after Block Earner was sued for offering financial services without a license for its crypto-related Earner product. The Court thought that Block Earner’s actions were serious. Still, it did not pay them a penalty because it believed they acted honestly and not carelessly when offering the Earner product.
Know The Background
Block Earner, operated by Web3 Ventures Pty Ltd, is registered with AUSTRAC as a digital currency exchange. However, it does not possess an Australian financial services licence (AFS). Platforms engaging with crypto-related products should understand that many of these products fall under financial products.
ASIC Information Sheet 225 Crypto Assets offers guidance on determining whether a crypto-related offering qualifies as a financial product. Various Australian laws apply to entities involved in advising, dealing, or providing intermediary services for crypto-asset-based products classified as financial products. This includes the requirement to obtain an AFS licence or relevant authorisations.
But A Rebuke Followed
The Australian judge reprimanded the regulator for issuing a “misleading media release.” The rebuke stems from a ruling made by Judge Ian McNeil Jackman in February. He determined that Block Earner’s yield-bearing “Earner” product was operating without the required license. In contrast, its DeFi “Access” service did not require the same licensing and could proceed without interruption. In 2022, the Australian Securities and Investment Commission (ASIC) initiated legal action against Block Earner regarding both products.
ASIC had requested a civil penalty of AU$ 350,000 from Block Earner. However, the crypto company argued in court that no penalty should be imposed. Instead, they suggested a penalty of AU$60,000, which is three times the profit they gained from the Block Earner products.
The judge finally decided that the fintech company shouldn’t have to pay a penalty for Earner. This was because the company honestly tried to work with the government to regulate crypto-related products and services. After the federal court’s ruling on February 9, ASIC was told to cover the costs incurred by Block Earner.
Related Reads:
