Fintech company Block Earner has been found by the federal court to have engaged in unlicensed financial services conduct when offering its crypto-backed Earner product.
In a media release today, ASIC said from March 2022 to November 2022, Block Earner offered consumers the Earner product which allowed them to earn fixed yield returns from different crypto-assets.
In one of the first decisions on the application of the financial services law to crypto-backed products, the Court found that Block Earner provided unlicenced financial services and operated an unregistered managed investment scheme when offering Earner. This is because the Earner product met the definition of a managed investment scheme and a facility for making a financial investment under the law.
However, the regulator’s allegation that Block Earner’s variable yield crypto-asset based offering was a financial product, in that it had the characteristics of a managed investment scheme, investment facility or derivative, was not accepted by the court.
ASIC will seek orders from the court imposing pecuniary penalties.