The Australian Securities and Investment Commission (ASIC) has instituted legal action against Finder Wallet, a subsidiary of Finder.com, over its unlicensed digital asset offering.
Finder Wallet launched Finder Earn in February, designed to offer users up to 6.01% interest on their deposits. Users were required to deposit Australian dollars in their accounts which were automatically converted to a stablecoin, TAUD.
In its public disclosure, ASIC classified the offering as a “debenture” because customers deposited money with the understanding that their funds would be repaid after being used by Finder Wallet. ASIC submitted that the Finder Earn product required the issuance of a license from the regulatory body.
“This is ASIC’s third recent action against a firm offering a crypto-asset related product that we consider to be a financial product. Our message to industry is clear — just because an offer involves a crypto-asset related product does not guarantee it will fall outside the current regulatory regime,” ASIC Deputy Chair Sarah Court said.
Furthermore, the regulator argued that by operating without a license, Finder Wallet exposed its consumers to potential harm. ASIC wrote that in financial products, there was a requirement for compliance with disclosures and risk mitigation processes.
“We allege that Finder Wallet failed to do this, potentially putting their customers at risk of harm,” ASIC said.
After ASIC notified Finder Wallet that its Finder Earn violated the law, the firm terminated the offering and returned all funds to the users. Nevertheless, ASIC is still seeking declarations and pecuniary penalties against Finder Wallet, with a date for the first case management hearing being in the works.
ASIC remains hell-bent on sanitizing the ecosystem
The financial watchdog has been on the warpath to rid the Australian financial and virtual currency ecosystem of bad actors. In recent months, the commission has launched several actions against firms offering unlicensed financial products to Australian consumers.
In November, ASIC opened civil proceedings against Block Earner for operating “an unregistered managed invest scheme by offering crypto-asset related yield earning products.” October recorded the commencement of civil penalty proceedings against BPS Financial Pty Ltd and the imposition of interim stop orders preventing Holon Investments Australia Limited from offering three funds to consumers.
Several regulations guide the offering of financial products to consumers in the country, but the Australian Financial Services (AFS) license is the primary license. Firms dealing in custodial or depository services, crowdfunding services, or involved in claims handling services are required to obtain an AFS license.
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