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  • J Huang and M Bacina

ASIC appeals Finder decision

The Australian Securities and Investments Commission (ASIC) has announced that they will appeal the Federal Court’s decision dismissing ASIC's allegations that Finder Wallet's Earn product was a debenture.

This crypto-asset Earn product allowed users to transfer cash, purchase True AUD stablecoins and be paid a fixed return for giving Finder the use of the stablecoins. Customers were paid in AUD on a compounding return of either 4.01% or in some cases 6.01% with a nifty little second by second counter showing the interest clocking up.

ASIC had alleged that by providing the Earn product, Finder Wallet provided unlicensed financial services, breached product disclosure requirements and failed to comply with design and distribution obligations.

ASIC's allegation centered around the Earn product being a debenture under Section 9 of the Corporations Act 2001 (Cth) (the Corporations Act) - with which the Federal Court disagreed. A debenture is defined as follows under the Corporations Act:

debenture of a body means a chose in action that includes an undertaking by the body to repay as a debt money deposited with or lent to the body. The chose in action may (but need not) include a security interest over property of the body to secure repayment of the money.

The Federal Court dismissed ASIC’s claims on 14 March 2024 and ordered ASIC to pay costs.

Now ASIC has appealed this decision. It said it is doing so because

it is concerned that the Finder Earn product was offered without the appropriate licence or authorisation and therefore without the benefit of important consumer protections.

ASIC has pursued its case on the basis that the Finder Earn product on the narrow basis that the product was a form of debenture. In a similar recent case involving Block Earner, ASIC alleged that two yield bearing products also involving cryptocurrency related offerings were in the form of a managed investment scheme, financial investment or derivative. The primary judge in this case was not required to address these matters based on ASIC's pleaded case.

It appears from ASIC's Notice of Appeal that it is basically re-running the same arguments, claiming that the primary judge "erred in" in applying the law, and his categorization of the Earn product terms.

ASIC's appeal is not a huge surprise, as the decision and adverse costs order was a significant set back for ASIC, which has recently indicated its intention to test its regulatory perimeter in relation to cryptocurrency related offerings. It also follows a partial win in the Block Earner case, in which ASIC failed to establish that Block Earner's access product was a financial product.

The appeal will be heard by the Full Federal Court on a date to be determined. It has been reported that Finder is “disappointed” with ASIC’s decision not to accept the Federal Court ruling, but is prepared to diligently defend its product in the Full Federal Court.

Written by J Huang, S Pettigrove and M Bacina


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