ASIC Targets Unlicensed Blockchain Firms, Court Grants $40 Mln Crypto Transfer

    Key Takeaways

    • Allegedly,450 investors were persuaded to invest $40 million into these unlicensed ventures. 
    • Allegations involve enticing local investors with the promise of fixed-rate returns from blockchain mining packages, without the necessary Australian financial license.

    In a recent development, the Australian Securities and Investments Commission (ASIC) has taken decisive action against NGS companies and their directors. Brett Mendham, Ryan Brown, and Mark Ten Caten now face legal proceedings for allegedly enticing local investors with the promise of fixed-rate returns from blockchain mining packages, all without the necessary Australian financial license.

    This move follows allegations that approximately 450 investors were persuaded to invest a whopping 62 million AUD ($40 million) into these unlicensed ventures. Concerned about potential losses of digital assets, ASIC swiftly obtained a Federal Court order to appoint liquidators to oversee the digital currency holdings of the NGS companies. Additionally, Brett Mendham, one of the accused directors, has been subjected to a travel ban.

    The Australian Federal Court has approved a request from ASIC to transfer approximately US$41 million in digital assets, invested by more than 450 Australians in the NGS group of blockchain mining companies, to three specialists from McGrathNicol, an independent advisory and restructuring firm.

    ASIC alleges that the NGS Companies targeted Australian investors, encouraging them to invest in blockchain mining packages without the necessary licenses. The regulatory body’s actions aim to shield investors from potential financial harm and ensure compliance with Australian financial regulations.

    While McGrathNicol’s involvement doesn’t necessarily indicate the collapse of the companies, ASIC’s concern about asset dissipation prompted the appointment of receivers as a precautionary measure. The ongoing investigation has seen ASIC seek interim and final injunctions to prevent the companies from operating without proper authorization.

    In parallel, ASIC’s scrutiny extends to other cryptocurrency entities like DCA Capital, Digital Commodity Assets Pty Ltd, and the Digital Commodity Assets Fund, all facing liquidation and federal court proceedings. This underscores the heightened regulatory oversight within Australia’s cryptocurrency sector.

    KordaMentha, the appointed liquidator, has revealed debts totaling 100 million AUD ($65 million) owed to 100 investors. To prevent further asset loss, the federal court has frozen the assets of DCA Capital’s director, Ashod Balanian, totaling 55 million AUD ($36 million), and ordered him to surrender his passport.

    ASIC has been increasingly targeting web3 firms in recent months. Earlier this week, ASIC filed an appeal against the Federal Court’s ruling to dismiss ASIC’s proceedings against Finder Wallet Pty Ltd. Finder Wallet Pty Ltd faced allegations of providing unlicensed financial services, violating product disclosure laws, and failing to fulfill design and distribution responsibilities for its product, “Finder Earn,” linked to crypto assets.

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