Australia's Markets Watchdog Sues Fintech Company Block Earner

The Australian Securities and Investments Commission said the company offered fixed-yield earning products that should be licensed, leaving consumers without important protections.

AccessTimeIconNov 23, 2022 at 12:32 p.m. UTC
Updated Nov 23, 2022 at 3:15 p.m. UTC

Australia's markets regulator is suing Block Earner, alleging the fintech company provided unlicensed financial services.

The Australian Securities and Investments Commission (ASIC) said Block Earner offered a range of fixed-yield earning products based on crypto assets, according to a statement from the commission Wednesday. The products should have been licensed because they are a managed investment scheme, leaving "consumers without important protections," it said.

“Although we understand the backdrop, this is a disappointing outcome," said Block Earner co-founder and CEO Charlie Karaboga in a statement to Business News Australia. Karaboga said since inception, customers' funds have been protected against events like the recent collapse of crypto exchange FTX and that a lack of regulatory clarity "creates friction between regulators and innovators." The company, which has backing from crypto exchange Coinbase, didn't immediately respond to a request for comment from CoinDesk.

The case isn't the first time ASIC has targeted the crypto industry. Last month, it sued BPS Financial, the company behind the qoin digital token, for running misleading ads.

"Simply because a product hinges on a crypto asset, does not mean it falls outside financial services law," ASIC Deputy Chair Sarah Court said in the statement. The regulator is seeking declarations, injunctions and pecuniary penalties. A hearing has not yet been scheduled.

Michael Bacina, a partner at law firm Piper Alderman, said the alarm around such financial products had already been sounded in the past few months. “Crypto products offering a percentage return are on a high risk of being seen to be a financial investment or managed investment scheme, even if they are structured as a loan arrangement,” he said.


Please note that our privacy policy, terms of use, cookies, and do not sell my personal information has been updated.

CoinDesk is an award-winning media outlet that covers the cryptocurrency industry. Its journalists abide by a strict set of editorial policies. In November 2023, CoinDesk was acquired by the Bullish group, owner of Bullish, a regulated, digital assets exchange. The Bullish group is majority-owned by; both companies have interests in a variety of blockchain and digital asset businesses and significant holdings of digital assets, including bitcoin. CoinDesk operates as an independent subsidiary with an editorial committee to protect journalistic independence. CoinDesk employees, including journalists, may receive options in the Bullish group as part of their compensation.

Amitoj Singh

Amitoj Singh is a CoinDesk reporter.