Australia’s federal court has exempted fintech firm Block Earner from paying a fine despite determining that the company had offered a crypto yield-bearing product without the necessary financial services license.
On June 4, Justice Ian Jackman ruled that Block Earner had acted in good faith. When the company launched its “Earner” product, it had considered obtaining a license but concluded, based on its research and legal advice, that a license was not required.
Block Earner’s founder and CEO, Charlie Karaboga, said that seeking a legal opinion before launching the product demonstrated their honest intentions and that they had done everything possible as a startup.
Karaboga stopped short of calling the outcome a “fair ruling.” He stated that the only “silver lining” was avoiding a financial penalty. However, the firm has suffered significant reputational damage and incurred substantial legal fees over the past two years.
Justice Jackman rejected the Australian Securities and Investments Commission’s (ASIC) request for a $234,000 (350,000 Australian dollars) fine. Block Earner had proposed a $40,000 (60,000 Australian dollars) penalty, which was three times the profit it had made from the product in question.
ASIC, in a press release issued on June 4, indicated that it is reviewing the court’s decision.
In a previous ruling in February, Justice Jackman determined that Block Earner’s “Earner” products, which offered yields on loans in USD Coin (USDC), Bitcoin (BTC), Ether (ETH), and PAX Gold (PAXG), required an Australian Financial Services License (AFSL).
However, the company’s “DeFi Access” product, which facilitates the use of the Aave lending protocol, was found not to operate under a managed investment scheme and thus did not require an AFSL.
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