ASIC, the Australian Securities and Investments Commission, has uncovered and shut down three companies within Australia that were operating illegally in the crypto mining sector.
Based on information from a recent report released on Friday, regulatory bodies responded to allegations from investors that the businesses NGS Crypto Pty Ltd, NGS Digital Pty Ltd, and NGS Group Ltd potentially engaged in illicit activities.
The ASIC initiated probes into the group of blockchain mining businesses referred to as “NGS companies.” It was discovered that about 450 Australians collectively invested around 62 million Australian dollars in these firms. The estimated value of these firms is approximately $40 million.
Civil Proceedings
Concerns from investors over possible mishandling of funds, insufficient permits, and suspected breaches of investment management rules led authorities to launch an inquiry.
After the probe, civil lawsuits ensued against the involved companies and their leaders, such as Brett Mendham, Ryan Brown, and Mark Ten Caten.
In the report, Australian regulatory bodies stated that Next Generation Services (NGS) broke the law by offering financial services in Australia sans a valid Australian financial services license as required under section 911A of the Corporations Act.
The regulatory authority is asking the court for temporary and permanent orders, prohibiting the companies from providing financial services in this area.
The financial regulatory body accused NGS firms and their leaders of approaching individual investors in the community, convincing them to set up personal retirement savings plans called SMSFs. Once established, these investors were then encouraged to invest in cryptocurrencies for participation in blockchain mining projects that guaranteed a consistent yield.
Court Grants ASIC’s Petition
Due to worries over the possible loss of digital assets invested in NGS firms, the regulatory body asked the Federal Court to assign liquidators to protect the affected parties’ funds.
On a Friday update, ASIC revealed that the court authorized its request on April 10, 2024, designating Anthony Connelly, Kathy Sozou, and Jamie Harris of McGrathNicol as the new holders of the cryptocurrencies. The regulatory body explained that this action was taken to safeguard the substantial funds allegedly obtained unfairly from investors.
The appointed individuals will also have the job of managing Mendham, Ten Caten, and Brown’s private possessions. Moreover, the court has imposed a travel restriction on Mendham, preventing him from leaving Australia.
ASIC Chair Joe Longo has cautioned Australians against investing their SMSFs in digital assets.
Australians pondering over managing their own retirement funds through Self-Managed Super Funds (SMSFs) need to be aware of the risks before investing in crypto-related assets like blockchain mining, Longo cautions.
Additionally, he emphasized that the current case serves as a reminder for the digital asset industry in Australia. ASIC intends to closely examine cryptocurrency offerings to make certain they adhere to our laws and safeguard investors’ interests.
In the meantime, ASIC will keep probing the corporations and their leaders until the matter is fully resolved.
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2024-04-15 10:36