A shocking ruling from the Federal Court of Australia has officially sided with Block Earner – the crypto lending company, in its legal battle with the financial regulatory agency ASIC. This decision not only helps Block Earner clear all accusations of violating financial law but also opens an important legal precedent for the digital asset industry in Australia.
Ruling: Crypto products are not 'financial products'
The crux of the matter revolves around the 'Earner' product once provided, allowing users to lend crypto for fixed returns. Previously, ASIC accused this product of being a 'financial product' requiring a license, and demanded heavy penalties for Block Earner.
However, in the latest ruling, the Federal Court of Australia affirmed that Earner is merely a form of "fixed term lending" – not falling under the definition of a financial product according to current law. The court stated:
Users simply lend digital currency to Block Earner and receive fixed interest, unrelated to the company's operational performance.
There is no collective investment activity or profit-sharing, so this cannot be considered a "managed investment scheme."
The contract between Block Earner and users is clearly a loan agreement, not a financial investment.
Therefore, all accusations from ASIC were dismissed, and this agency was ordered to pay all legal costs for Block Earner, including costs from the initial trial.
A significant impact on the crypto ecosystem in Australia
This ruling could become an important legal precedent for how crypto products are regulated in Australia in the future.
Notably, Block Earner's CEO – Mr. Charlie Karaboga – stated:
"From the beginning, we have strived to design products that fit into a legal environment that has not kept pace with innovation."
Currently, about 4 million citizens have interacted with digital assets, and accurately defining what constitutes a financial product versus peer-to-peer lending can have widespread implications for how businesses operate and innovate in this field.
Mr. James Coombes, Commercial Director of Block Earner, also confirmed:
"The more digital assets are treated like traditional assets, the easier it is for businesses to innovate."
The product is not reinstated even after winning the lawsuit
Despite winning the lawsuit entirely, Block Earner stated they have no plans to relaunch the Earner product. The company has voluntarily ceased offering this product since ASIC filed a lawsuit at the end of 2022, and still maintains its position of operating within the legal framework.
The decision not to relaunch Earner shows that this victory has more significance legally and for future direction, rather than just short-term financial benefit.
Connecting with the crypto market: Is Australia 'opening up'?
In the context of many countries still unclear about regulations for crypto, the ruling from the Federal Court of Australia can be seen as a positive turning point, helping to promote:
Legal clarity for blockchain projects.
The competitiveness of fintech companies within the current legal framework.
The market psychology is more stable thanks to trust in the legal system.
This may lead many international crypto projects to consider Australia as a friendly and transparent destination, especially amid tightening regulations in other jurisdictions like the USA.
Risk warning:
Cryptocurrency is a highly volatile and risky area. This article is for informational purposes only and should not be considered investment advice. Readers should conduct thorough research and exercise caution when participating in financial products related to digital assets.