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 regulator ASIC. This decision not only helps Block Earner clear all allegations of financial law violations but also opens up an important legal precedent for the digital asset industry in Australia.
Ruling: Crypto products are not 'financial products.'
The focal point of the case revolves around the 'Earner' product previously offered, allowing users to lend crypto for fixed profits. Previously, ASIC accused this product of being a 'financial product' requiring a license, while also demanding heavy fines against Block Earner.
However, in the latest ruling, the Federal Court of Australia affirmed that Earner is merely a form of "fixed-term lending" – not within the definition of financial products under current law. The court stated:
Users simply lend digital money to Block Earner and receive fixed interest, unrelated to the company's business 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 allegations by ASIC were dismissed, and the agency was ordered to pay all legal costs for Block Earner, including the costs of the initial trial.
Significant impact on the crypto ecosystem in Australia.
This ruling could set an important legal precedent for how crypto products are regulated in Australia in the future.
Notably, CEO of Block Earner – Mr. Charlie Karaboga – stated:
"From the very beginning, we have strived to design products that fit within a legal environment that has not kept pace with innovation."
Currently, about 4 million people have been exposed to digital assets, and accurately defining what constitutes a financial product and what is peer-to-peer lending could have widespread implications for how businesses operate and innovate in this field.
Mr. James Coombes, Commercial Director of Block Earner, also affirmed:
"The more digital assets are treated like traditional assets, the easier it is for companies to innovate."
The product is not restored even after winning the lawsuit.
Despite winning the lawsuit completely, Block Earner stated they have no plans to reopen the Earner product. The company has suspended this product since ASIC filed the lawsuit at the end of 2022 and still maintains its position to operate within the legal framework.
The decision not to reopen Earner shows that this victory carries more significance in terms of legal implications and future direction rather than just short-term financial benefits.
Connecting with the crypto market: Is Australia 'opening up'?
In the context where many countries still lack clarity on regulations for crypto, the ruling of 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.
Market psychology is more stable thanks to trust in the legal system.
This could lead many international crypto projects to consider Australia as a friendly and transparent destination, especially in the context where other jurisdictions like the USA are tightening regulations.
Risk warning:
Cryptocurrency is a highly volatile field with significant risks. 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.