Finder Wallet secures victory in landmark ASIC appeal

On 24 July 2025, the Full Court of the Federal Court handed down judgment in ASIC v Wallet Ventures Pty Ltd [2025] FCAFC 93 completely dismissing the Australian Securities and Investments Commission’s (ASIC) appeal and upholding an earlier ruling that the Finder Earn product was not a debenture under the Corporations Act 2001 (Cth) (Corporations Act).

Background

In December 2022, ASIC commenced civil penalty proceedings in the Federal Court of Australia against Finder Wallet Pty Ltd (Finder). ASIC alleged that Finder provided unlicensed financial services, breached product disclosure requirements and failed to comply with design and distribution obligations in connection with the Finder Earn product. Finder disagreed with the allegation but after first being contacted by ASIC, they removed the product.

The Finder product allowed users to transfer cash, purchase TrueAUD stablecoins and be paid a fixed return for giving Finder the use of the stablecoins. Customers earned a “return” in AUD of either 4.01% paid daily or sometimes a promotional rate of 6.01%.

ASIC alleged that the product was a debenture under section 9 of the Corporations Act, which is defined as follows:

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.

(Emphasis added)

The Federal Court concluded that the product did not meet the definition of a debenture. ASIC announced that they had appealed the decision in April 2024.

ASIC’s appeal

ASIC appealed the decision on two grounds, asserting that:

1. The primary judge erred in holding that the Finder Earn product was not a debenture because the investor lent or deposited money with Finder Wallet. Alternatively, ASIC argued the acquisition of TrueAUD and its subsequent transfer to Finder Wallet should be treated as a single arrangement (under section 761B of the Corporations Act) for determining whether the Finder Earn product was a debenture; and

   
   

2. The primary judge erred in finding that there was no undertaking by Finder Wallet to repay money as a debt. ASIC argued that the statutory definition of a debenture does not require the funds to be used as part of the respondent’s working capital. Alternatively, if it was required, ASIC contended that Finder Wallet did use the funds as working capital.

   
   

Full Court Reasons

The Full Court decided that there was no error in the primary judge’s conclusion that the Finder Earn product did not involve an undertaking by Finder Wallet to repay as a debt money deposited or lent to it for the following reasons (at [30]‒[45]):

1. Interestingly, the Court began by clarifying that ASIC did not allege the Finder Earn product was “in any sense a sham” (i.e. it was not directed to the deliberate avoidance of regulation).

2. Customers were able to use their accounts for various reasons such as purchasing other cryptocurrencies or claiming a refund. This was a significant consideration because it “rule[d] out any contention that the deposit of money … was a part of a single transaction with the … conversion of money to TrueAUD”.

3. It was accepted that TrueAUD is a species of property and therefore did not confer the same rights and entitlements as money.

4. When customers acquired TrueAUD, ownership of that property was transferred to Finder Wallet. The company was under a contractual obligation only to return equivalent property (that is, the same amount of TrueAUD plus a return), not to repay money as a debt. This was not consistent with the term “money debt” notwithstanding that the term debt has been judicially recognised as a flexible concept. The Court considered that this arrangement was more analogous to the concept of “lending” in the context of securities lending.

5. The fact that TrueAUD was pegged to the Australian dollar at a 1:1 ratio was not determinative. While this may have provided investors with comfort against volatility, it did not transform TrueAUD into “money” for the purposes of the Corporations Act.

7. ASIC’s reliance on section 761B of the Corporations Act also failed. The problem with ASIC’s argument was that the appeal framed the relevant transaction as beginning only when the customer selected the Finder Earn product, excluding the initial deposit of AUD. Once that initial deposit was left out, the remaining steps involved only the transfer of property and therefore could not satisfy the requirement that money be deposited with or lent to the company.

   
   

   Even if the scope were broadened to include the initial AUD deposit, the arrangement still would not qualify as a "single scheme" (within the meaning of “arrangement” under section 761B(2)(c)) because customers had other options for using their funds such as withdrawing them or purchasing other cryptocurrencies. This meant it could not reasonably be said that the parties regarded the arrangement as a single scheme.

7. Finally, the Court noted that clause 3 of the Terms and the FAQ materials relied on by ASIC confirmed that customers allocated cryptocurrency (not money) to Finder Wallet.

   
   

Since the Court held that the appeal failed on ground (1) for the reasons outlined above, it was unnecessary to consider ground (2) and the appeal was accordingly dismissed.

The road to regulatory clarity

The appeal decision provides important clarification of the legal principles applicable to debentures and following on the heels of the recent Full Court victory by Block Earner in establishing that its fixed yield loan product was not a managed investment scheme or financial investment product. In this decision, the Full Court again reiterated the primacy of user terms in defining legal rights and obligations consistent with the approach in the Block Earner case. ASIC has sought leave to appeal that decision to the High Court of Australia.

ASIC's loss follows a string of mixed results in enforcement actions targeting the crypto industry aimed at "clarifying the regulatory perimeter". These decisions have demonstrated the intellectual rigour which the Courts have applied in understanding crypto-asset relating offerings and applying the existing regulatory framework despite its shortcomings.

In response, ASIC issued a media release stating that it was “carefully considering the decision and its implications”, but notably conceding that:

This decision highlights the challenges in the current regulatory framework concerning debentures and the application of the existing financial services regime to products involving crypto assets.

While an appeal by ASIC cannot be ruled out (noting the current application seeking leave to appeal to the High Court in the Block Earner case), the result again highlights the difficulty of a regulation-by-enforcement approach, which is expensive and leads to uncertain outcomes.

Both industry participants and regulators face great challenges in applying the complex legal definitions in the Corporations Act to novel and innovative product offerings in an adversarial proceeding.

The judgment also makes the case for legal reform as a more effective and efficient means of establishing clear rules and consumer protections for crypto-asset offerings. Litigation aimed at clarifying the law comes at substantial cost and has a chilling effect on innovation. In this case, Finder opted to exit its entire cryptocurrency business (now renamed Wallet Ventures Pty Ltd) prior to the appeal judgment being handing down.

Although Finder won this case, the judgment makes clear that crypto businesses face significant regulatory uncertainty and costs if a regulator decides to sue, even if they are successful. In other jurisdictions, this uncertainty is being addressed through legal reforms such as the US Genius Act passed last week which provides a bespoke regulatory framework for payment stablecoins. With the returning Labor Government embracing a productivity and innovation agenda, Australia may increase efforts to provide fit for purpose regulation and targeted relief to promote digital asset innovation while ensuring effective consumer protections and leave regulation by enforcement behind.

Written by Steven Pettigrove and Emma Assaf with Michael Bacina