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ASIC Appeals Federal Court Ruling on Finder Wallet's "Earn" Product

An appeal has been submitted by the Australian Securities and Investments Commission (ASIC) against a decision made by a federal court that rejected the action that it had brought against Finder Wallet Pty Ltd and its cryptocurrency product known as “Earn”. The court had previously determined that Finder Wallet was in accordance with the laws governing financial services in Australia. This ruling has the potential to have substantial repercussions for future cases in Australia that involve cryptocurrencies and regulatory compliance.

To provide some context, the Australian Securities and Investments Commission (ASIC) initiated legal action against Finder Wallet in December 2023, saying that the firm had violated the rules governing financial services by offering its “Earn” product without first obtaining an Australian Financial Services Licence (AFSL). The Australian Securities and Investments Commission (ASIC) said that the product functioned as a debenture, which is a kind of financial instrument that requires disclosure with the regulator as well as the issuing of a target market statement. Finder Wallet reportedly failed to satisfy both of these requirements.

The actions brought by the Australian Securities and Investments Commission (ASIC) were dismissed by the Federal Court in March 2024. The Federal Court said that the ASIC had failed to prove that the “Earn” product offered by Finder Wallet was a debenture and that it was operating within the legal confines. In light of the fact that the monies that were transmitted to Finder Wallet were not meant to be used for the purpose of raising capital for the firm, the court dismissed the argument that the funds constituted a deposit or loan. The court, on the other hand, characterised the connection between Finder Wallet and its consumers as a contractual commitment, as opposed to the usual debt payback that is connected with debentures.

The Australian Securities and Investments Commission (ASIC) has filed an appeal against the verdict made by the Federal Court. The ASIC has expressed its concern that the “Earn” product was sold without the required licence or permission, which resulted in the absence of significant consumer safeguards. The appeal is an attempt to address the need for appropriate licencing and regulatory control in the cryptocurrency field. This is done with the intention of ensuring that consumers are appropriately protected when interacting with goods of this kind.

The decision of the appeal filed by the Australian Securities and Investments Commission (ASIC) might have substantial repercussions for the regulation of bitcoin goods in Australia. The purpose of this investigation is to evaluate whether or whether businesses who sell crypto-based goods that are comparable are required to get the requisite licences and comply with regulatory responsibilities . In addition, the appeal raises awareness about the significance of consumer protection measures in the cryptocurrency business, which is undergoing fast development.

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Bitmain Business Booming Despite Public Feud Between Co-Founders Jihan Wu and Micree Ketuan Zhan

Mining giant Bitmain continues to accelerate—signing a new $23 million Antminer S19 Pro Contract with Marathon Patent Group—despite the public feud between its co-founders Jihan Wu and Micree Ketuan Zhan dominating the news over the last year.

Global leader in cryptocurrency and Bitcoin mining equipment, Bitmain has continued to expand its business with an announcement today that it has signed a $23 million Antminer S19 Pro Contract with Marathon Patent Group.

Marathon Patent Group (Marathon) is a Nasdaq-listed cryptocurrency mining company based in Las Vegas Nevada, has entered a Long-Term Purchase Contract of $23 million to purchase 10,500 Antminer S19 Pro.

Bitmain’s Antminer S19 Pro is purportedly equipped with the most advanced chipset currently available and continues to dominate the preferences of major mining firms’ orders.

According to Irene Gao, Antminer Sales Director of NCSA Region, Bitmain, these new miners are set to “bring in a new era of Bitcoin mining” and demand for the Antminer S19 Pro is rising throughout the industry.

But how has Bitmain continued to develop, expand and remain profitable throughout a very bitter and public feud between its co-founders Jihan Wu and Micree Ketuan Zhan?

The Last Antminer Shipment Was Delayed

The feud is evidently starting to impact negatively on Bitmain’s operations. In July, some 10,000 Antminers, worth about $10 million, were reportedly “stolen” from a mining facility owned by the company in Inner Mongolia. Some reports say the equipment appeared to have been “illegally transferred”.

On Aug 6, it was reported that Bitmain had to delay shipments of its Antminer bitcoin mining machines by three months, due to the ongoing feud between co-founders, Jihan Wu and Micree Zhan Ketuan, as control of the company intensified.

Bitmain said in the announcement that the delay was a result of “external interference over the company’s management.” Jihan Wu’s faction is reportedly in control of the company’s Wechat account and released the message.

The Feud Recap

The feud between Bitmain’s co-founders began in October 2019, when Wu ousted Zhan in a surprise move. Through mass emails, Wu ordered staff to stop taking orders from then-CEO Zhan, threatening them with termination if they even attended one of Zhan’s meetings.

The news surprised the entire organization as Wu had stepped out of his Bitmain CEO role to focus on his own cryptocurrency startup—Matrixport.

Zhan also refused to take the ousting in his stride and pushed back with legal action—suing Bitmain’s parent company.

In March 2020, China’s Changle district court made a ruling that favored Zhan to freeze out 36% of Fujian Zhanhua’s shares owned by Bitmain. Fujian Zhanhua is entirely owned by Bitmain Technologies Holding, of whom Zhan is the shareholder with the largest stake of 36%.

But on 27th April 2020, Bitmain claimed in their latest statement that the case that Zhan had submitted has no proof that he (Zhan) owns such stake in the company, which makes the claim as baseless for a legal ruling.

Bitmain argued the court’s ruling as only a procedural, jurisdictional rule and a physical fight broke out at a government office in Beijing after local authorities tried to hand the company’s operating license to ousted co-founder Zhan.

When the pair founded Bitmain in 2013, Wu and Zhan rode a historic crypto boom that made them both into billionaires. But the two co-founders have not managed to see eye to eye on the company’s future. When Wu took over, he made of point of undoing a lot of Zhan’s initiatives that had yet to make a profit, including a push into AI chips.

Jihan Wu Regains Control Of China Bitcoin Miner Making Giant Bitmain

The ongoing power struggle for control of Bitcoin mining equipment giant Bitmain has taken an interesting turn as former CEO and co-founder Jihan Wu has regained legal representative status.

According to China’s business registration record of Bitmain, an update on Sept. 14 shows Jihan Wu as the legal representative and executive director of Bitmain’s operating entity—Beijing Bitmain Technology.

Rival co-founder Micree Zhan who was ambushed by Jihan Wu via email last October remains manager of the firm but has subsequently is no longer recognized as Bitmain’s legal representative in China and will no longer have broad powers to act on the mining giant’s behalf.

A further announcement was published by Wu on Sept.15 on the company’s WeChat account. Wu confirmed that he is now the legal representative and Executive Director of Bitmain, and that the company’s respect for Zhan in a management role remains unchanged.

The Feud Recap

The news surprised the entire organization as Wu had stepped out of his Bitmain CEO role to focus on his own cryptocurrency startup—Matrixport.

Zhan also refused to take the ousting in his stride and pushed back with legal action—suing Bitmain’s parent company.

Australia’s Securities Regulator Approves the Launch of Crypto ETFs

Australia’s securities regulator has given the green light to investment firms seeking to launch ETFs with underlying cryptocurrencies to be able to do so.

Australian Securities and Investments Commission (ASIC) announced on Friday, October 29, that it had approved the use of cryptocurrencies as underlying assets for exchange-traded products (ETPs).

ASIC stated on Friday: “We recognize the interest in, and demand for, ETPs and other investment products that hold crypto-assets in Australia.”

After several months of engaging in consultations with market players seeking to launch their own crypto ETFs, the regulator made such a move.

New Guidelines for Crypto ETFs Trading

Besides that, the agency published a new guideline for providers looking to offer ETPs backed by the performance of crypto assets.

For cryptocurrency to be allowed to back an ETP or other structure product, it must meet five requirements: a mature spot, transparent and robust pricing mechanisms, a high-level institutional acceptance and support, experienced and reputable service providers to support the products, and regulated futures for trading derivatives, according the ASIC’s new guidelines.

Under the new guidelines, Bitcoin and Ethereum appear to have satisfied the regulator’s criteria as appropriate underlying assets for exchange-traded products (ETPs).

Another requirement states that investment firms will need to hire a custodial cryptocurrency expert to ensure cryptocurrencies are held in secure and safe custody.

The ASIC also requires fund managers to put a minimum of $10 million in net tangible assets to launch a crypto ETF. Fund managers are also expected to comply with other risk management, disclosure, and pricing obligations.

Despite such a series of new requirements, the agency stated that it will still take a case-by-case approach to license crypto assets for listing. So far, the regulator has approved only Bitcoin and Ethereum, although other cryptocurrencies are also expected to get listed on Australia’s stock exchanges soon.

“We proposed this because we recognize that crypto-assets vary greatly in their features, characteristics, risks and how they operate, and we consider that only some may be appropriate to be held by a registered managed investment scheme,” ASIC said.

ASIC Commissioner Cathie Armour talked about the development and stated that such new guidelines are necessary to mitigate the risks associated with such products.

“The good practices we published provide practical examples of how these obligations may be met, in a way that maintains investor protections and Australia’s fair, orderly and transparent markets,” Armour said.

Australia’s Crypto ETFs Debut

So far, ETF manager Betashare has become the first investment firm to launch a crypto-backed ETF on the Australian stock exchange, which is expected to start trading on Australia’s ASX stock exchange soon, possibly on Thursday this week.

Less than 24 hours after Betashare announced the launch of its Bitcoin ETF, Cosmos asset management firm also launched its crypto-backed ETF (Cosmos Global Digital Miners Access ETF), which is also scheduled to begin trading on ASX’s biggest rival Chi-X stock exchange.

The regulator stated that such crypto linked ETFs could be followed by products offering more direct exposure to crypto-assets in the coming months.

Aussie Trading Platform Collapses after User's Damning Complaints

MyCryptoWallet, a platform that operates as a trading platform in Australia, has notably gone bankrupt. An inevitable situation occurred as many of the platform’s users started complaining that they are unable to access their funds on the exchange.

An investigation report revealed by a local news channel, including The Age and The Sydney Morning Herald, had it that the exchange’s troubles started back in April when the complaints began.

Exchange representatives at the time responded to the reports, claiming that they were false and that the platform has no operational challenges.

“It is quite upsetting to hear you are creating an article about false negativity regarding MyCryptoWallet rather than the amazing, ground-breaking blockchain technology we offer Australian users,” the spokeswoman said at the time.

However, complaints received by Australian market regulator ASIC confirmed that the trading platform is unable to meet its customers’ demand for liquidity. SV Partners, an asset liquidation expert, has now been appointed to oversee the case and help users retrieve their funds from the exchange.

The woes of MyCryptoWallet confirmed the frailty of the cryptocurrency industry in Australia, as this will be the second exchange that went under this year. ACX exchange entered into a voluntary administration earlier this year, owing creditors $21 million.

Australia is one of the few crypto-friendly nations in the world. However, the government is planning to start regulating the digital currency industry, a move that may attract strict regulations going by the risks exchanges in the country are exposing consumers to. Australians are known to be the subject or the victims of major crypto frauds or scams, a situation the regulators may seek to change in the near future.

Trading platforms are one of the first avenues for anyone to get involved in the cryptospace and this has often predisposed them to a number of mishaps. Japan’s MtGox went bankrupt after suffering from a series of hacks, while Canadian exchange, QuadrigaCx went under with the death of its owner, Gerald Cotten.

Aussie Regulator Halts 3 Crypto Funds Belonging to Holon Investments

The Australian Securities and Investment Commission (ASIC) has issued a stop order on three crypto funds belonging to Sydney-based Holon Investments Australia Limited.

According to a Press Release shared by the regulator on Monday, the three Holon crypto funds include those linked to Bitcoin (BTC), Ethereum (ETH), and Filecoin (FIL) respectively.

According to the regulator, the reason for the halt in the offering of these crypto funds is that the firm did not meet the non-compliant target market determinations. ASIC fears that Holon is offering the product to retail investors whose investment goals and capabilities may not necessarily fit into the risks associated with the three products.

The regulator reiterated that the embargo is temporary and will remain so for the next 21 days. The selection of Bitcoin, Ethereum, and Filing is essentially based on their extreme volatility and by a subtle extension, their popularity among retail investors.

“The interim orders stop Holon from issuing interests in, giving a product disclosure statement for or providing general advice to retail clients recommending investments in the Funds. The order is valid for 21 days unless revoked earlier,” the announcement reads, adding that “ASIC made the interim orders to protect retail investors from potentially investing in funds that may not be suitable for their financial objectives, situation or needs.”

The regulator noted that Holon Investments has the right to meet its requirements to offer the products, otherwise, it will place a final stop order on the products.

The Australian ecosystem is one that is very vibrant, however, with a lot of fraudulent practices hitting users in the country, regulators are very cautious in their attempts to protect the average consumer. The same sentiment is shared by regulators in other top economies like the United States and the United Kingdom.

In all, this offering of protection accounts for why many nations are still relatively slow with their embrace of regulation when compared to major crypto hubs like the UAE and Singapore.

Unregistered Crypto Asset Manager BPS Sued by Aussie Regulator

The Australian Securities and Investment Commission (ASIC) has brought civil penalty proceedings in the Federal Court against BPS Financial Pty Ltd, one of the asset management firms operating in the country.

According to a press release shared by the regulator, BPS Financial made a number of false and misleading statements about Qoin Financial tokens which it allegedly distribute to 79,000 investors.

As noted by ASIC, BPS Financial marketed the Qoin token by promising that those who hold the coin can exchange them for other financial assets including the Australian Dollar on independent exchanges. While BPS also alleges that the Qoin token can be used to purchase goods and pay for services from merchants it is in partnership with, it claimed that the wallet and crypto product of the Qoin token were regulated by relevant authorities.

The Aussie regulator came to find out that none of the claims of the company are true and that is contrary to the claims, the products were not licensed, and neither were token holders able to liquidate their holdings as promised on independent brokerage firms.

“We allege that, despite what BPS represented in its marketing, Qoin merchant numbers have been declining, and that there have been periods of time where it was not possible to exchange Qoin tokens through independent exchanges,” said ASIC Deputy Chair Sarah Court, “ASIC is particularly concerned about the alleged misrepresentation that the Qoin Facility is regulated in Australia, as we believe the more than 79,000 individuals and entities who have been issued with the Qoin Facility may have believed that it was compliant with financial services laws when ASIC considers it was not.”

Effectively, ASIC is seeking declarations, pecuniary penalties, injunctions, and adverse publicity orders from the Court. The regulator has been playing a more active role in the industry and recently halted 3 crypto funds belonging to Holon Investments in a bid to protect consumers.

Australian regulator sues Finder.com for crypto yield offering

The company disagrees with ASIC’s assertion that a crypto yield-bearing product from Finder’s registered exchange was operating illegally, but the company has not disclosed whether or not it intends to contest the litigation.Finder.com, a website that compares different financial products, is facing legal action from Australia’s financial services authority because of allegations that the company offered a bitcoin yield-bearing contract without the necessary license.It is the second local supplier of a crypto yield product that the regulator has taken action against, after the action that was taken against Block Earner in November.

On December 15th, legal action was initiated by the Australian Securities and Investments Commission (ASIC) against a locally registered digital currency exchange that was a subsidiary of Finder.com known as Finder Wallet.Finder Earn gave its customers the opportunity to earn an annual return of between 4.01% and 6.01% in exchange for depositing the stablecoin True AUD, which was tied to the Australian dollar (TAUD).The Australian Securities and Investments Commission (ASIC) said that the product in question was a debenture, which is a kind of unsecured loan instrument that calls for a license from the Australian Financial Services (AFS).Finder is not in agreement with this evaluation.The representative for Finder.com asserted that the decision to stop selling the product was a strategic business decision made because of increasing interest rates and was not the result of regulatory examination.When asked whether it will oppose the litigation, Finder said that it would refrain from making any more comments since the case is still pending before the courts.In the announcement, Sarah Court, the deputy chair of ASIC, stated that the organization is sending a clear message to the industry, and that message is that the mere fact that an offer involves a crypto-asset related product does not guarantee that it will fall outside of the current regulatory regime.It’s the third time in as many months that ASIC has taken legal action against crypto financial products and the companies that supply them, and this time it’s a lawsuit against Finder.com.In October, the regulator filed a lawsuit against the financial services company BPS Financial for unauthorized activities linked to its Qoin token. The allegations against the company include making allegedly deceptive assertions that Qoin was regulated in Australia.In November, the Australian Securities and Investments Commission (ASIC) filed a lawsuit against the fintech company Block Earner for marketing three crypto-backed fixed-yield earning products without having an appropriate AFS license.In reaction to the lawsuit, the CEO of Block Earner lashed out at the ambiguity that exists within the country’s regulatory framework for financial licensing.

Australia's Government is Bolstering Its Market Regulator's Digital Asset

As part of its “multi-stage strategy” to cracking down on cryptocurrencies and ensuring that crypto companies provide accurate risk disclosures, the Australian government is increasing the size of the digital asset team that works under its market regulator.

The new restrictions are intended to safeguard consumers who are dealing with bitcoin, as described in a joint statement released on February 2 by the Assistant Treasurer of Australia, Stephen Jones, and the Australian Treasurer, Jim Chalmers.

The treasurers said that the multi-stage strategy would entail three components, these components being the strengthening of enforcement, the strengthening of consumer protection, and the establishment of a framework for its token mapping reform.

The Australian Securities and Investments Commission (ASIC) has announced that they would be “upping enforcement efforts” as well as increasing the number of their digital assets division. This is one of the most significant adjustments.

According to Chalmers and Jones, the ASIC would have a primary emphasis on ensuring that customers are adequately informed of the potential hazards posed to them by crypto product and service providers.

In the meanwhile, the Australian Competition and Consumer Commission (ACCC), the country’s competition watchdog, will soon be receiving new tools from the government to assist it in protecting consumers against frauds using cryptocurrencies. The total amount of money lost to scams using cryptocurrency payments was recorded to be $221 million in 2022.

The ACCC will use the new technology, which will be in the form of a real-time data-sharing platform, to detect and prevent frauds using cryptocurrencies.

When a framework is finalised to regulate the licencing and custody of digital assets, consumer protection will also be strengthened. This will “ensure consumers are protected from avoidable business failures or from the misuse of their assets by service providers,” according to the official description of the goal of the framework.

However, the implementation of this framework won’t begin until the middle of 2023, and it’s likely going to take a significant amount of time until it’s codified into law.

Iris Energy to Triple Mining Capacity With Thousands of New Rigs

Iris Energy, a Bitcoin (BTC) mining firm located in Australia, has said that it plans to roughly increase its mining capacity by adding thousands of mining rigs.

The company said on February 13 that it has bought an extra 4.4 exahashes per second (EH/s) worth of Bitmain Antminer S19j Pro ASIC miners, which increased the company’s self-mining capability from 2.0 EH/s to 5.5 EH/s.

Iris’ co-founder and co-chief executive officer, Daniel Roberts, referred to the acquisition as “a huge milestone” for the firm. He also said that the current time period has been “a trying one for both the sector and markets more generally.”

Iris said that the new miners would be put at the company’s centers, but she did not specify which areas those centers are located in. The company runs four different sites, three of which are in British Columbia, Canada, and one of which is in the state of Texas, in the United States.

“without any extra monetary expenditure,” the acquisition of the machines was made possible by the use of the company’s leftover prepayments totaling $67 million to the ASIC miner manufacturer Bitmain.

Iris had a deal with Bitmain for 10 EH/s, however the company claims that the arrangement “has been entirely settled, with no lingering obligations.” It was said that there are no outstanding debts.

The company has said that it is also contemplating its options regarding the sale of surplus miners that are in excess of its 5.5 EH/s of mining capacity in order to reinvest the cash.

Because the units were generating “insufficient cash flow to meet their individual debt financing commitments,” the firm was compelled to disconnect miners that were used as security on a loan worth 107.8 million dollars in November of last year.

Over the course of the last several months, cryptocurrency miners have been subjected to pressure from numerous fronts. They have been forced to contend with low Bitcoin values in the context of high hash rates, high mining difficulty, and high energy expenses.

The pressure drove publicly listed Bitcoin mining businesses to sell off virtually all of the BTC generated for the year of 2022. For example, according to data provided by blockchain research company Messari, Iris sold about 100% of the roughly 2,500 BTC it mined during that year.

Hashrate Index conducted an investigation in February which found that publicly listed miners boosted their output in January. The analysis also found that improved weather and steady rates for energy contributed to the production rise. Iris’ output in January resulted in 172 BTC, which is an increase over December’s total of 123 BTC.