The Australian Securities and Investments Commission (ASIC) recently prevailed in its case against Block Earner after a court ruled that the crypto startup’s product offering violated the country’s Corporations Act. The judge ruled that the ASIC had “succeeded in establishing contraventions of s 601ED and 911A of the Act in relation to the Earner product.”
Block Earner’s Product Offerings Violate Corporation Act
An Australian Federal Court has ruled in favor of the Australian Securities and Investments Commission (ASIC) in a case pitting the regulator and crypto startup, Block Earner. In his ruling, Judge Ian Jackman assessed that Block Earner had violated sections of the Corporations Act 2001 by offering the “Earner” product without the necessary Australian financial services license.
The judge also ruled that Block Earner had breached sections of the same Act by operating an unregistered managed investment scheme relating to the same product. According to the judgment issued on Jan. 31, ASIC had approached the court seeking an order against Block Earner’s two product offerings, “Earner” and “Access” products.
As stated in the judgment, both products were introduced in March 2022. However, only the Access product continues to be offered. The Earner product, on the other hand, was discontinued around Nov. 16, 2022, after a mere eight-month run.
A Managed Investment Scheme
The Australian Securities and Investments Commission (ASIC) has posited that both products qualify as financial products. This is because each product exhibits characteristics of a managed investment scheme. According to the Australian regulator, such a classification implies that Bock Earner, which does not possess the Australian Financial Services Licence, has violated pertinent sections of the Corporations Act.
“If Earner or Access are financial products, then it is common ground that Block Earner has contravened s 911A of the Act by carrying on a financial services business without holding an Australian Financial Services Licence (AFSL). Further, if either Earner or Access is a managed investment scheme, then it is common ground that Block Earner has contravened s 601ED(5) of the Act by operating an unregistered managed investment scheme,” the ASIC contended.
After a thorough examination of the arguments presented by ASIC and the counter-arguments put forth by Block Earner, via its co-founder and CEO, Charlie Karaboga, an Australian judge ruled in favor of the former. The judge stated that ASIC had “succeeded in establishing contraventions of s 601ED and 911A of the Act in relation to the Earner product.”