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 Australia’s Federal Court has spared fintech company Block Earner from paying a fine despite ruling that it offered a cryptocurrency yield-bearing product without a necessary financial services license.
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The Federal Court recognized the seriousness of Block Earner’s violations but decided against imposing a penalty, citing the firm’s honest intentions and lack of carelessness. On June 4, Justice Ian Jackman <a style="color: #0000ff;" href="https://www.judgments.fedcourt.gov.au/judgments/Judgments/fca/single/2024/2024fca0578" rel="noopener noreferrer nofollow">concluded</a> that Block Earner acted “honestly” when it launched its “Earner” product.
Block Earner claimed, at the time of its launch, it had considered obtaining a licence, but their research and legal advice suggested it wasn’t required.
The Australian Securities and Investments Commission (ASIC), who <a style="color: #0000ff;" href="https://asic.gov.au/about-asic/news-centre/find-a-media-release/2022-releases/22-324mr-asic-sues-block-earner-for-unlicensed-conduct-over-crypto-asset-based-products/" rel="noopener noreferrer nofollow">brought the lawusit</a> against Block Earner because the company offered the Earner product without an Australian Financial Services License (AFSL), has <a style="color: #0000ff;" 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/" rel="noopener noreferrer nofollow">expressed</a> concern over the ruling. In a press release released the same day, the regulator stated that it is currently reviewing the decision.&nbsp;
ASIC emphasised that products involving crypto-assets are still subject to financial services laws and Block Earner’s unlicensed services depriving consumers of essential protections.
Previously, in February 2024, the Court <a style="color: #0000ff;" 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/" rel="noopener noreferrer nofollow">found</a> that from March to November 2022, Block Earner had provided unlicensed financial services and operated an unregistered managed investment scheme through its fixed-yield Earner product.&nbsp;
Justice Jackman ruled that Block Earner’s Earner products, which offered yields on loans in USD Coin (USDC), Bitcoin (BTC), Ether (ETH), and PAX Gold (PAXG), required an AFSL.
However, the company’s “DeFi Access” product, which facilitates the use of the Aave lending protocol, was not penalised as the court determined it did not operate as a managed investment scheme and thus did not require a licence. Block Earner terminated the Earner product on November 16, 2022, prior to the court proceedings.
ASIC had <a style="color: #0000ff;" href="https://asic.gov.au/about-asic/news-centre/find-a-media-release/2022-releases/22-324mr-asic-sues-block-earner-for-unlicensed-conduct-over-crypto-asset-based-products/" rel="noopener noreferrer nofollow">sued</a> Block Earner in November 2022, arguing that both the Earner and DeFi Access products needed licences because they were managed investment schemes, pooling investor money to purchase assets.
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The post <a href="https://defi-planet.com/2024/06/australian-court-exempts-block-earner-from-fine-despite-breaching-financial-laws/" rel="noopener noreferrer nofollow">Australian Court Exempts Block Earner from Fine Despite Breaching Financial Laws</a> appeared first on <a href="https://defi-planet.com" rel="noopener noreferrer nofollow">DeFi Planet</a>.

Australian Court Exempts Block Earner from Fine Despite Breaching Financial Laws

DeFi Planet

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