The Australian Securities and Investments Commission (ASIC) has sued the FinTech company Block Earner for allegedly offering cryptocurrency investments without a license.
“Block Earner offered a range of fixed-yield earning products based on crypto-assets under the names USD Earner, Gold Earner and Crypto Earner (collectively, the earner products),” the regulator said in a Wednesday (Nov. 23) news release.
In a suit filed in Australia’s federal court, ASIC alleged that these products were financial products that should have been licensed as a managed investment scheme.
“We are concerned that Block Earner offered financial products without appropriate registration or an Australian Financial Services license, leaving consumers without important protections,” ASIC Deputy Chair Sarah Court said in the release. “Simply because a product hinges on a crypto-asset, does not mean it falls outside financial services law.”
ASIC said in the release it is asking the court for “declarations, injunctions and pecuniary penalties.”
In an email to PYMNTS, Nidhi Gorai, a spokesperson for Sydney-based Block Earner, wrote:
“We welcome regulation in our space and have spent considerable resources building regulatory infrastructure to be able to deliver a whole suite of services to Australian users in a regulated and compliant manner under existing guidelines provided by ASIC.
“Needless to say, lack of clarity around regulation in Australia for cryptocurrency-related products creates friction between regulators and innovators like Block Earner in our industry.”
The case comes amid a worldwide campaign to increase oversight on cryptocurrency in the wake of the FTX collapse and a rise in crypto-related crime.
“From trading at less than a dollar in its first few years of existence to over $60,000 in late 2021, the story of bitcoin’s meteoric rise has often been used by scam artists as bait for inexperienced investors looking to make huge gains in the crypto space,” PYMNTS wrote Wednesday.
The promise of “the next big thing in crypto” has been used to peddle bogus coins, make false claims, and swindle people out of their money. Not to mention exchanges and initial coin offerings (ICOs), phishing attacks and other cyberhacks used to steal people’s crypto assets.
A Freedom of Information (FOI) request from Capital Block showed that between July 2021 to June 2022, the United Kingdom’s Financial Conduct Authority (FCA) received a total of 7,287 reports of crypto asset scams, a 45% year-over-year increase.
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