The Australian Securities and Exchange Commission (ASIC) has announced its intention to challenge the Federal Court’s decision not to proceed with its legal action against Finder Wallet. In the initial hearing, ASIC argued that Finder Wallet’s Finder Earn crypto product qualified as an unlicensed debenture. However, the court disagreed and dismissed the case.
“ASIC is challenging the Federal Court’s ruling that dismissed ASIC’s case against Finder Wallet Pty Ltd over accusations of offering unlicensed financial services, violating product disclosure regulations, and neglecting design and distribution responsibilities concerning their crypto-asset offering ‘Finder Earn.'”
ASIC Appeal Follows 2022 Lawsuit
In December 2022, the Australian Securities and Investments Commission (ASIC) filed a lawsuit against Finder Wallet in Federal Court for various infringements. The charges include providing customers with unauthorized financial goods, violating disclosure requirements, and failing to adhere to design and distribution obligations (DDO) related to Finder Earn. According to ASIC, Finder Earn was essentially a debenture as users deposited funds with the expectation of receiving their principal back, plus returns from Finder Wallet. Therefore, ASIC claims that Finder Wallet should have registered this product and secured the necessary licenses.
From February to November 2022, Finder Wallet reportedly provided an investment service called Finder Earn. Clients made payments in Australian dollars, which Finder Wallet converted into TAUD, a digital currency that mirrors the value of the Australian dollar. This converted money was set aside by Finder Wallet for operational funds. In return, depositors earned an annual percentage yield of 4.01% or 6.01%.
The ASIC informed Finder Wallet on November 24, 2022, that they had concerns about their product, leading to its permanent suspension. After this suspension, the company reimbursed every customer in full. However, the ASIC then filed a lawsuit against the company.
On March 14, the Federal Court ruled against Finder Earn’s classification as a debenture and dropped the case. As reported by Australian law firm Lander & Rogers, the court made this decision because no deposit or loan was involved with Finder Wallet. Furthermore, the court determined that Finder Wallet had not provided a promise to repay any deposit as a debt. The judgment stated that TAUD (the transferred funds) was considered personal property rather than “money,” given to Finder Wallet under a contractual arrangement for future return. ASIC is now challenging this verdict to safeguard customers.
According to the report, ASIC has challenged this ruling as they are worried that the Finder Earn product was sold without the necessary license or approval. Consequently, customers may have been deprived of essential safeguards.
Finder Wallet is a digital currency exchange registered with the Australian Transaction Reports and Analysis Centre (AUSTRAC).
ASIC Crypto Crackdown
Last year, the ASIC initiated probes and brought charges against several crypto companies. In February, they started looking into Binance for allegedly shutting down derivatives accounts using misleading labels. In April, the ASIC took away the license they had given to Binance through Oztures Trading Pty Ltd, a local branch of the company. According to an ASIC statement, it was Binance who requested this license withdrawal.
In July, FTX Australia’s license was revoked by the Commission due to its parent company declaring bankruptcy in November. It is reported that FTX Australia obtained its license through a series of acquisitions rather than directly from the ASIC.
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2024-04-10 14:45