The Full Federal Court has allowed an appeal by digital asset service provider Block Earner, finding that Block Earner did not need a financial services licence to offer its digital asset-related Earner product.
The cryptocurrency exchange was found to have offered a financial product and operated a managed investment scheme without holding an Australian Financial Services Licence, the Federal Court ruled last year.
The ruling overturns the Federal Court’s original decision that Block Earner’s Earner product was a financial product.
Block Earner is the trading name of Web3 Ventures Pty Ltd. It is an AUSTRAC-registered digital currency exchange. It does not hold an Australian financial services licence.
On 9 February 2024, the Court found that from March to November 2022, Block Earner engaged in unlicenced financial services conduct when offering its fixed-yield digital asset-related Earner product.
The Court dismissed ASIC’s allegations that Block Earner’s variable-yield digital-asset-related offering, known in ASIC’s proceedings as the Access product, was a financial product, that Block Earner needed a financial services licence for this product and that the product needed to be registered as a managed investment scheme.
On 4 June 2024, the Federal Court relieved Block Earner from liability to pay a penalty for offering the Earner product.
ASIC had appealed the Federal Court’s decision to relieve Block Earner from liability to pay a penalty for contraventions related to unlicensed financial services when it offered the Earner product. As Block Earner successfully appealed the finding that the Earner product was a financial product, the Full Court considered it did not need to make a finding about the relief from liability to pay a penalty and ASIC’s appeal was dismissed.