The Australian Federal Court has exempted fintech company Block Earner from paying a fine, despite the court finding it offered a cryptocurrency revenue-generating product without a financial services license.
Judge Ian Jackman ruled on June 4 that Block Earner had “acted honestly” and, at the time of launching its Earner revenue-generating product, had considered obtaining a license, but its research and legal advice concluded that she didn’t need it.
Getting legal advice before launching the product “showed that we acted honestly and did everything we could do as a startup,” Charlie Carabuga, founder and CEO of Block Earner, told Cointelegraph.
He refused to call it a “fair judgment”, explaining that the only “positive side” was that he did not need to pay a fine. Carabuga said the company still suffered “reputational damage” from the case and “lost a lot of money” in legal fees.
Judge Jackman rejected ASIC’s request for a $234,000 ($A350,000) fine. Block Earner sought a fine of $40,000 ($A60,000), three times the amount he earned from the product he was sued over.
The Australian Securities and Investments Commission (ASIC) said in a June 4 statement that it was reviewing the decision.
In February, Judge Jackman ruled that the “Earner” products introduced by Block Earner in 2022 – which give returns on loans in USD Coin (USDC), Bitcoin (BTC), Ether (ETH) and PAX Gold (PAXG) – needed Australia. financial services. License (AFSL).
The company’s “DeFi Access” product – which facilitates the use of the Aave lending protocol – escaped sanctions because the court ruled that it did not operate under a managed investment program and that It was therefore not necessary to have an AFSL.
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ASIC sued Block Earner in November 2022, alleging that Earner and DeFi Access products needed licensing because they were managed investment programs – when a fund pools investors’ money and uses it to buy assets.
The Earner product operated from March 17, 2022 to November 16 of the same year after Block Earner terminated it before legal proceedings.
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