The CEO of fintech company Block Earner has lashed out at a “lack of clarity” in Australia’s financial licensing regime after his company was sued by the country’s financial services regulator. for offering unlicensed cryptocurrency-based investment products.
The Australian Securities and Investments Commission (ASIC) announced on Nov. 23 local time that it had initiated civil court proceedings against the company because it offered three cryptocurrency-linked fixed income products without an Australian Financial Services (AFS) license..
The ASIC stated that the products should have been licensed as they were “managed investment schemes” where investors contribute money that pools together to obtain a share in the plan.
The products, dubbed “Crypto Earner,” “USD Earner,” and “Gold Earner,” offered returns through users depositing Australian dollars that would be converted into bitcoin (BTC), Ether (ETH), USD Coin (USDC), or PAX Gold (PAXG) depending on the productaccording to the Block Earner website.
Next, crypto assets are lent to borrowers in the Aave (AAVE) and Compound Finance (COMP) decentralized finance (DeFi) protocols to generate the return on the product.
The vice president of the ASIC, Sarah Court, expressed concern that Block Earner offered the products without “proper registration” or a license from AFS, which she said left “consumers without important protections.”and added:
“Just because a product revolves around a crypto asset, it does not mean that it will be outside the financial services law.”
In an emailed statement to Cointelegraph, Block Earner CEO and co-founder Charlie Karaboga said that although the firm “[entiende] the backdrop” was a “disappointing result”.
He said he welcomes the regulations, and claims that the company “spent considerable resources building the regulatory infrastructure” to be able to offer services “under the existing guidelines provided by ASIC”.
Karaboga criticized the unclear regulatory environment for cryptocurrencies in the country, saying that the “lack of clarity […] creates friction between regulators and innovators”adding:
“In an ideal world, we would build these products in a regulatory framework with more clarity around licensing regimes. In the future, we look forward to working with the ASIC and other regulators in this space.”
According to Karaboga, Block Earner has applied for a credit license and has informed the ASIC that it will apply for an AFS license for its upcoming products as “the license requirements are clear”.
ASIC previously warned crypto asset providers in the country after taking action against Qoin token creators.
Said its “key priority” is to attack “unlicensed conduct and misleading promotion of crypto-asset financial products” after it alleged that the creators of the Qoin token were “misleading” its users.
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Investments in crypto assets are not regulated. They may not be suitable for retail investors and the entire amount invested may be lost. The services or products offered are not directed or accessible to investors in Spain.
