The Australian Securities and Investment Commission (ASIC) has filed a lawsuit against Finder Wallet, a subsidiary of Finder.com. The lawsuit alleges that Finder Wallet provided unlicensed financial services, breached product disclosure requirements, and failed to comply with design and distribution obligations (DDO) when it offered its crypto-asset related product Finder Earn.
In a media release by ASIC, the Australian corporate regulator said that between late February and November 10, 2022, Finder Wallet through its crypto-asset product Finder Earn allowed Australians to deposit Australian dollars into their accounts, which were then converted to Australian dollar-pegged stablecoin called TAUD; the funds were then allocated and used by Finder Wallet as its working capital. Customers who deposited into their accounts were paid a compounding interest of 4.01% or 6.01% per annum.
ASIC says it deems Finder Earn a debenture as funds deposited by customers are used as capital for Finder Wallet, and customers’ motive for depositing funds is to gain returns.
Sarah Court, ASIC Deputy Chair, said that finder wallet had a requirement to comply with disclosure and DDO obligations because Finder Earn appeared to be a financial product. “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,” Sarah Court said.
Australia Plans to Tighten Crypto Regulation in 2023
A Roy Morgan research conducted earlier this year revealed that over one million Australians own cryptocurrency. The regulation of the crypto industry has been on the agenda of Australian authorities. The Australian government recently published a joint media release in which it mentions a planned framework for the licensing and regulation of crypto service providers. “The next steps in the Government’s ongoing ‘token mapping’ work will include the release of a consultation paper in early 2023 to inform what digital assets should be regulated by financial services laws, and the development of appropriate custody and licensing settings to safeguard consumers,” the media release states.
In a similar vein, Hong Kong recently passed a bill that will introduce a licensing regime for virtual assets service providers (VASP), which will come into effect in mid-2023.
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