Aave

Block

PAX Gold

Gold

Australia’s federal court has relieved fintech firm Block Earner from paying a fine despite the court finding it offered a crypto yield-bearing product without a financial services license.
Justice Ian Jackman <a href="https://www.judgments.fedcourt.gov.au/judgments/Judgments/fca/single/2024/2024fca0578" target="_blank" rel="noopener nofollow">ruled</a> on June 4 that Block Earner “acted honestly,” and at the time its yield-bearing “Earner” product launched, it did consider getting licensed, but its research and legal advice concluded it didn’t need one.
Block Earner founder and CEO Charlie Karaboga told Cointelegraph that getting a legal opinion before it launched the product “showed that we acted honestly and did everything that we could do as a startup.”
<figure>
 <img src="https://s3.cointelegraph.com/uploads/2024-06/2566f42e-b859-4bc4-86ac-7728a8ced864.PNG" alt="" title="">
 <figcaption style="text-align: center;">
 The court ruled that the Block Earner tried to obtain legal advice. Source: Federal Court of Australia
 </figcaption>
</figure>
In a statement, Block Earner said the decision not only relieves the firm of financial penalty but&nbsp;“also acknowledges the reputational damage resulting from inaccurate statements made by ASIC in a press release following the Court’s earlier decision about liability.”
The court ordered ASIC to pay Block Earner’s costs incurred from after Feb. 9 — the day <a href="https://cointelegraph.com/news/block-earner-ruling-australian-court-distinction-crypto-yield-products">Justice Jackman ruled</a> the firm’s “Earner” products it offered in 2022 — giving yield on loans in USD Coin (<a href="https://cointelegraph.com/usdc-price-index">USDC</a>), Bitcoin (<a href="https://cointelegraph.com/bitcoin-price">BTC</a>), Ether (<a href="https://cointelegraph.com/ethereum-price">ETH</a>) and PAX Gold (PAXG), needed an Australian Financial Services License (AFSL).
Justice Jackman agreed with Block Earner that an ASIC press <a href="https://asic.gov.au/about-asic/news-centre/find-a-media-release/2024-releases/24-019mr-court-finds-block-earner-needed-financial-services-licence-to-offer-earner-crypto-product/" target="_blank" rel="noopener nofollow">release</a> from that day was “misleading and unfair” as its headline stated that Block Earner’s product “needs” an AFSL — but the product hadn’t been on offer since November 2022.
Justice Jackman shot down the&nbsp;Australian Securities and Investments Commission’s (ASIC) ask for a $234,000 (350,000 Australian dollars) fine. Block Earner asked for a $40,000 (60,000 Australian dollars) penalty — three times the amount it earned from the product that it was sued over.
ASIC said in a June 4 press <a href="https://asic.gov.au/about-asic/news-centre/find-a-media-release/2024-releases/24-119mr-court-relieves-block-earner-from-liability-to-pay-a-penalty-for-offering-unlicensed-crypto-related-product-earner/" target="_blank" rel="noopener nofollow">release</a> that it is reviewing the decision.
Related: <a href="https://cointelegraph.com/news/asic-bps-financial-qoin-token-deception-case">Australian court rules against Qoin issuer BPS Financial on 4 charges</a>
In Justice Jackman's February ruling, the company’s “DeFi Access” product — which facilitates the use of the lending protocol Aave — escaped punishment as the court found it didn’t operate under a managed investment scheme, so no AFSL was needed.
ASIC <a href="https://cointelegraph.com/news/block-earner-ceo-calls-for-licensing-clarity-after-being-sued-for-crypto-products">sued Block Earner</a> in November 2022, alleging both the Earner and DeFi Access products needed a license as they were managed investment schemes — when a fund pools investor money and uses it to buy assets.
The Earner product operated from March 17, 2022, to Nov. 16 that year after Block Earner ended it prior to the court proceedings
Magazine: <a href="https://cointelegraph.com/magazine/crypto-city-guide-sydney-harbor-bridge-synthetix-finder/">Crypto City guide to Sydney — More than just a ‘token’ bridge</a>
Additional reporting by Felix Ng.

Block Earner spared penalty in regulator’s crypto yield suit

Cointelegraph

Other articles published on Jun 4, 2024

Edge Video AI Announces IDO for Native Token $FAST

Brett Price Prediction: BRETT Is The Top Meme Coin Gainer With a 27% Pump And This DOGE P2E ICO M...

Pepe Loves Solana (PEPELSOL) to Skyrocket 14,000% Before KuCoin Listing, While Shiba Inu, Bonk an...

FTX agrees settlement in $24b IRS tax case

Hong Kong gets ready to shut down all unlicensed crypto exchanges

Investors Earn Significant Profits from Speculative Price Movements

Join our free newsletter for daily crypto updates!