An Australian federal court has revoked the fine imposed on Block Earner by the Australian Securities and Investments Commission (ASIC), citing the fintech company’s honest conduct.
The ASIC sued Block Earner, claiming its Earner and DeFi Access products were unregistered. However, the court’s decision proves the exchange’s sincere activities regarding its crypto income product without the license.
The Court Overrules ASIC’s Penalty Fine Against Block Earner
On June 4, the Federal Court of Australia gave a remarkable ruling overturning an anticipated huge fine against Block Earner.
In November 2022, the Australian Securities and Investments Commission (ASIC) sued Block Earner regarding its operation. According to the regulator, the fintech firm has been offering some crypto income products without a financial services license.
Moreover, the ASIC classified the products as managed investment schemes. Such investment schemes typically involve the fund manager pooling investors’ funds to acquire some assets.
While the court confirmed that Block Earner’s crypto income products were unlicensed, it saw the company’s honest conduct.
The court discovered that Block Earner planned to get a license during the launch of its Earner product. However, its legal advice and internal research indicated that a license wasn’t necessary for its operations.
So, the presiding judge, Ian Jackman, noted that the fintech firm acted in good faith and waived ASIC’s $234,000 penalty against the company.
Also, Block Earner’s founder and CEO, Charlie Karaboga, elaborated on how the exchange sought legal advice before its product launch. They tried to engage with the Australian authorities, indicating their readiness to operate within the right legal boundaries.
Further, reacting to the court’s ruling, Karaboga believes it’s still far from a “just ruling.” He said the company escaped a financial penalty, but it has witnessed reputational damage and significant legal costs.
Court Scolds And Orders ASIC To Pay Costs
The court scolded ASIC for publishing a “misleading media release” regarding its case with Block Earner and ordered the regulator to pay part of the expenses of the legal dispute with the fintech firm.
The scolding came after Judge Jackman’s February ruling, which noted that the Earner product was unlicensed. However, the judge mentioned that the DeFi Access service didn’t require similar licensing, permitting the company to continue offering it.
Meanwhile, ASIC released a statement titled, “Court finds Block Earner crypto product needs financial services license.” The statement mentioned that ASIC failed to win the argument that the Access product requires a license.
Reacting to ASIC’s press release, Block Earner debated that the act was “unfair and misleading,” gaining the support of Judge Jackman. So, after the court’s February 9 judgment, the judge ordered ASIC to pay the exchange’s legal costs.
Block Earner demanded $40,000 (60,000 Australian dollars) as costs, three times its earnings from the product in the lawsuit. However, ASIC noted that it would seek a review of the court’s ruling via a press release on June 4.
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