Key Takeaways:
- The Australian Securities and Investments Commission (ASIC) is appealing a Federal Court decision that ruled Finder Wallet’s “Earn” product compliant with Australian financial regulations, challenging its classification under the Corporations Act.
- The court previously found ASIC did not prove the Earn product was a “debenture,” as it didn’t involve traditional deposits or loans, raising ASIC’s concerns over consumer protection without proper licensing.
- Finder Wallet’s Earn service allowed conversions of Australian dollars into the stablecoin TrueAUD to earn yields, but despite the court victory, Finder has not planned to reintroduce the product amid ongoing legal scrutiny.
The Australian Securities and Investments Commission (ASIC) is taking its battle against Finder Wallet to the next level by appealing a federal court decision.
Last month, the court ruled that Finder Wallet’s “Earn” product, associated with Australian fintech firm Finder.com, adhered to Australian financial regulations, a verdict ASIC is now contesting.
We have appealed the Federal Court’s decision to dismiss our proceedings against Finder Wallet regarding its crypto-asset related product, Finder Earn https://t.co/FMM3aiGcSG pic.twitter.com/CLMGPEpen2
— ASIC Media (@asicmedia) April 11, 2024
ASIC’s contention revolves around the classification of the Finder Earn product as a “debenture” under the Corporations Act, which implies a form of debt security where the borrower commits to repaying the lent amount with interest.
The court, however, led by Justice Brigitte Markovic, concluded on March 14 that ASIC had not convincingly proven that Finder Wallet’s product fell into this category, as it did not involve the traditional depositing of money or loans to Finder Wallet by investors.
ASIC is appealing a court ⚖️ decision that found Finder Wallet's "Earn" product compliant with Australian financial laws. #ASIC #FinderWallet pic.twitter.com/ehv4F0bMcN
— 1ATH.Studio (@1ATHStudio) April 11, 2024
Furthermore, ASIC disputes the court’s decision on the grounds that Finder Wallet did not promise to return money as a debt, raising concerns over the lack of consumer protection for those using the Earn product without the requisite licensing or authorization.
This appeal was officially lodged on April 10, indicating ASIC’s ongoing concerns about the potential for consumer harm due to inadequate regulatory safeguards.
The case is set to be reviewed by the Full Federal Court, a body that considers appeals on matters deemed of significant importance from the Federal Court.
The Australian Securities and Investments Commission (ASIC) has appealed to the federal court regarding its decision to dismiss the regulator's civil penalty lawsuit against Finder Wallet Pty Ltdhttps://t.co/Km0N7QF9bI
— crypto.news (@itscrypto_news) April 10, 2024
This court ranks just below the High Court of Australia in the judicial hierarchy.
Finder, on its part, expressed disappointment over ASIC’s unwillingness to accept the initial ruling but reaffirmed its commitment to defending the Earn product’s legality in court.
The Finder Earn service, which was available from February to November 2022, allowed users to convert Australian dollars into TrueAUD (TAUD), a stablecoin pegged to the Australian dollar.
ASIC is appealing the Federal Court's decision to dismiss its case against Finder Wallet and its cryptocurrency Earn product. https://t.co/LLwZhU0vor
— SmartCompany (@SmartCompany) April 11, 2024
This could then be deposited into Finder Wallet to earn yields between 4-6%.
ASIC initiated legal proceedings against Finder Wallet in December 2022, categorizing the Earn product as an unauthorized financial service.
The regulator also suggested that Finder Wallet’s decision to discontinue the product a month prior to the lawsuit was a direct response to ASIC’s expressed concerns, although Finder attributed the discontinuation to strategic business reasons, including the changing landscape of interest rates rather than regulatory pressures.
🔔 Australia's Securities Regulator Appeals @finder Wallet Case Defeat !#ASIC is appealing its court loss against #FinderWallet, a sister company of https://t.co/87IkQMgRdT, over the compliance of its "Earn" product with Australia's financial laws. The court ruled in favor of… pic.twitter.com/gzzJcqlzbK
— Altcoin Alerts (@Altcoin_Alerts) April 11, 2024
Despite the legal victory, Finder has announced no plans to reintroduce the Earn product.
This development underscores the complex interplay between innovation in the fintech sector and the regulatory frameworks designed to ensure consumer protection, a balance that remains a contentious issue as digital financial products continue to evolve.
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