Australian financial regulator (ASIC) has sued Coinbase and Aave backed financial technology firm, Block Earner over alleged involvement in unlicensed crypto services. The development was made known in a statement by ASIC on Wednesday.
However, the court is yet to schedule a hearing date as of the time of filing this report. According to ASIC, Block Earner offered unauthorized crypto products to citizens of Australia. Worth noting that Block Earners runs as a provider of various levels of products that offer yield on crypto holding. In 2021, it secured $4.5 million from its first first seed funding round l. The funding round witness participation from investors such as Aave CEO Stanu Kulechov and Coinbase ventures. Notably, the firm also lends out client assets through Aave and Compound protocols.
Further, ASIC claims Block Earner products run as unregistered managed investment scheme that requires licensing. This development thus made the regulator to initiate a civil penalty proceedings in the Federal Court against Block earners. The financial regulator is seeking declarations, injunctions, and pecuniary penalties from the court against the firm.
In a statement issued by ASIC Deputy Chair, Sarah Court, ASIC seems concerned that Block Earner offered financial products without appropriate registration or license. According to her, this leaves its customers without important protections. She further stated that a product hinging on crypto-asset is not above financial services law.
ASIC looks to developing an effective regulatory framework for cryptocurrencies
In addition, Court further noted that ASIC seems aware that many consumers looks interested in crypto-assets. According to her, Crypto-assets remains risky, inherently volatile, and complex. She revealed the concern of the agency towards the nonchalance of investors to the potential risks associated with crypto-assets. Furthermore, Court revealed that ASIC promotes the development of an effective regulatory framework covering crypto-assets to protect consumers and investors.
Over time, the Australian Securities and Investment Commission (ASIC) has continuously taken actions to ensure that investors are protected from harms posed by crypto-asset offerings. On 17 October, the financial regulator placed an interim stop order, preventing Holon Investments Australia Limited from offering or distributing three funds to retail investors. According to findings, ASIC issued the stop order owing to the non-compliant target market determinations of the firm. As revealed, each of the funds became invested in a highly volatile crypto asset. This thus raises concern, indicating that Holon failed to appropriately considered the features and risks of the funds in determining their target markets.
Furthermore, the financial regulator recently commenced a civil penalty proceedings against BPS Financial Pty Ltd. This suit manifested after the firm allegedly issued misleading statements in connection to its crypto asset Qoin.
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