Summary
The Australian Securities and Investments Commission (ASIC) has launched civil penalty proceedings against Finder Wallet, a subsidiary of Finder.com, for allegedly offering unlicensed financial services, breaching product disclosure requirements, and failing to comply with design and distribution obligations (DDO) for its crypto-asset related product Finder Earn.
ASIC alleges that the product was, in substance, a debenture and therefore required an Australian financial services license. ASIC is seeking declarations and pecuniary penalties from the Federal Court.
The action in the Federal Court follows the regulator's recent moves against other companies in the crypto space such as Block Earner and BPS Financial, a group affiliated with the crypto-asset token Qoin.
"This is ASIC’s third recent action against a firm offering a crypto-asset related product that we consider to be a financial product," says ASIC Deputy Chair Sarah Court.
"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."
Background
Between late February and 10 November 2022, Finder Earn customers deposited Australian dollars into their accounts, which were then converted to an Australian dollar-denominated ‘stablecoin’ called TAUD and allocated to Finder Wallet to use for its own working capital.
ASIC also alleges that Finder Wallet required an Australian financial services licence to offer Finder Earn, because it was providing financial product advice or dealing in a financial product.
The regulator alleges that offering Finder Earn without a licence exposed consumers to potential harm, including the possibility that they were offered a product that was not suitable for them.
The date for the hearing has not yet been scheduled.
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