In a noteworthy legal showdown, the Australian Federal Court delivered a mixed verdict on Block Earner, a Sydney-based crypto start-up. The court found that offering its crypto-backed Earner product amounted to unlicensed financial services conduct. However, it wasn’t all tough news for Block Earner, as the court also cleared its DeFi “Access” service, marking a partial win against Australia’s markets regulator.
Judge Ian McNeil Jackman, who interestingly shares a familial connection with actor Hugh Jackman, presided over the case. Despite the setback regarding the Earner product, Block Earner’s team might still see a silver lining. The court’s forthcoming decision on the fine, set for a hearing on March 1, 2024, is eagerly awaited.
The Australian Securities and Investments Commission (ASIC) had initiated the lawsuit against Block Earner in November 2022, challenging the legality of its range of fixed-yield earning products tied to cryptocurrencies. In a proactive move, Block Earner had already paused its Earner service voluntarily the same month, in anticipation of regulatory scrutiny.
ASIC Deputy Chair Sarah Court expressed that the court’s decision sheds light on the regulatory landscape for crypto-backed products, emphasizing the need for licensing under Australian law. This ruling might serve as a beacon for other crypto enterprises navigating the regulatory waters, offering clarity and a path forward.
For Block Earner, the court’s acknowledgment that the Access service can continue is a significant victory. The company views this as a positive step towards a future where decentralized finance (DeFi) can flourish within the regulatory framework, promising for the fintech and crypto industry at large.
