Australia’s financial regulator has sued Sydney-based Block Earner, citing concerns that the fintech company offered unlicensed crypto products.
Block Earner offers several tiers of products that offer yield on crypto holdings. The Australian Securities and Investment Commission, or ASIC, claims these products are unregistered managed investment schemes that should have been licensed.
ASIC opened up a civil penalty file with the federal court seeking declarations, injunctions, and pecuniary penalties.
“We are concerned that Block Earner offered financial products without appropriate registration or an Australian Financial Services license, leaving consumers without important protections,” ASIC Deputy Chair Sarah Court said in the statement. “Simply because a product hinges on a crypto-asset, does not mean it falls outside financial services law.”
Block Earner launched its seed funding round in 2021 and secured $4.5 million, from investors including Aave CEO Stani Kulechov and Coinbase Ventures. The platform lends out client assets through Aave and Compound protocols.
We welcome regulation in our space and have spent considerable resources building regulatory infrastructure to be able to deliver a whole suite of services to Australian users in a regulated and compliant manner under existing guidelines provided by ASIC,” CEO Charlie Karaboga said.
“As a case in point, for our upcoming products where the licensing requirements are clear, we have already filed for an application for an Australian Credit License and advised ASIC of our intention to apply for an [Australian Financial Services license],” he added.