CNA – Australia’s corporate regulator sued the country’s biggest comparison website yesterday concerning a cryptocurrency product, accusing it of conducting unlicensed financial services and breaching consumer protection laws.
The lawsuit is the third by the Australian Securities and Investments Commission (ASIC) against a supplier of crypto-related products in the past two months as it tries to rein in the still largely unregulated sector.
Finder Wallet, a unit of price comparison website Finder.com, effectively sold a debenture product without a financial services licence by inviting people to deposit money in an account, converting it to a “stablecoin” and paying guaranteed returns, ASIC said in a federal court filing.
The civil lawsuit requested a court declaration that the company broke laws requiring it to hold a financial services licence, disclose investment risks, and make a formal declaration about the product’s intended market, as well as unspecified fines.
ASIC Chairman Joe Longo said in parliament this month that the regulator wants to test in court whether crypto assets count as financial products under the law.
“Just because an offer involves a crypto-asset-related product does not guarantee it will fall outside the current regulatory regime,” ASIC Deputy Chair Sarah Court said in a statement published with the Finder.com lawsuit.
ASIC’s court filing said people who used Finder.com’s product “made uninformed (or inadequately informed) investments, exposing them to a risk of loss… given that they did not have the benefit of the regulatory regime”.
As of September, Finder Wallet owed AUD20.8 million to consumers in the absence of legal protections, the court filing added.
A Finder.com spokesperson told Reuters the company did “not share ASIC’s view that Finder Earn can be regarded as a debenture” and said all customer money was returned when the product was closed in November. The spokesperson did not say if Finder.com would defend the lawsuit.