The Australian Securities And Investments Commission (ASIC) has launched legal proceedings against Finder.com, a financial product comparison website, for offering a crypto-based yield product without the necessary license.
This is the second local provider to be targeted by the regulator for a crypto performance product, following the case against Block Earner in November.
The ASIC court action on December 15 local time focused on Finder Wallet, the digital currency exchange subsidiary of Finder.com.
ASIC stated that the Finder Earn product was an unlicensed financial product and that Finder Wallet had breached product disclosure requirements and failed to comply with obligations regarding the distribution of financial products.
Finder Earn allowed users to earn an annual return in the range of 4.01% to 6.01% by depositing the Australian dollar-pegged True AUD (TAUD) stablecoin.
The regulator argued that the product was a bond, an unsecured debt instrument for which a license from the Australian Financial Services (AFS) was required.
Commenting on the case, ASIC asserted that consumers could have been exposed to potential harm by being offered a product that was not suitable for them.
“We do not share ASIC’s view that Finder Earn can be considered an obligation,” said a spokesperson for Finder.com to Cointelegraph.
Finder Earn was “sunset” on November 24, which ASIC states was because it had notified Finder Wallet of its concerns.
The Finder.com spokesperson claimed that the decision to discontinue the product was a strategic business choice driven by rising interest rates and not triggered by a regulatory review.
“When we were notified, we were in the middle of sunset [ASIC] so they could have a closer look,” the spokesperson added.
Both ASIC and the Finder.com representative confirmed that all user funds were returned in full after the termination of Finder Earn.
When asked if they would dispute the lawsuit, Finder said “As this matter is before the courts, I will not comment further.”
In a statement, Sarah Court, vice president of ASIC, said that her “message to the industry is clear: just because an offering involves a crypto-asset-related product does not guarantee that it will fall outside of the current regulatory regime.”
Related: Australian ‘Token Mapping’ Consultation Paper To Be Published In Early 2023: Treasurer
The ASIC action against Finder.com is the third in as many months related to crypto financial products and the companies that provided them.
In November, the regulator sued fintech company Block Earner for offering three cryptocurrency-backed fixed-yield products without an AFS license. The CEO of Block Earner then criticized the “insufficient clarity” of the regulatory licensing regime in the country.
Financial services firm BPS Financial was sued by ASIC in October for “unlicensed conduct” related to its “Qoin” token, with alleged “misleading” representations that Qoin was regulated in Australia.
ASIC Chairman Joe Longo has previously warned that companies promoting “high-risk and niche” crypto investment products will face action.
