ASIC challenges Australian federal court over Finder Wallet

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 Ltd.

“ASIC has appealed the Federal Court’s decision to dismiss ASIC’s proceedings against Finder Wallet Pty Ltd for allegedly providing unlicensed financial services,” the regulator said in an April 10 statement.

In December 2022, ASIC sued Finder Wallet, a subsidiary of Finder.com, an AUSTRAC-registered digital currency exchange. Finder Wallet, which was live from late February to Nov. 10, 2022, offered its users an investment product dubbed Finder Earn.

With Finder Earn, customers could deposit Australian dollars into their accounts. This was then converted to TAUD, an Australian dollar-backed stablecoin, and allocated to Finder Wallet for use as operating capital. In return, the users would receive annual compounding returns of 4.01%.

In its lawsuit, the Australian regulator claimed that the Finder Wallet provided financial services without an Australian Financial Services license. Further, the regulator alleged that the service was also in violation of product disclosure laws and also disregarded design and distribution obligations (DDO).

The commission labeled the Finder Earn product a debenture, with Sarah Court, deputy chair of ASIC, stating back then that offering a cryptocurrency product “does not automatically mean that it will be exempt from the present regulatory framework.”

On March 14, 2024, Justice Brigitte Markovic of the Australian Federal Court ruled that ASIC has not established that the Finder Earn product is a debenture” under the nation’s Corporations Act. 

“As each of the contraventions of the Corporations Act alleged by ASIC is predicated on establishing that the Finder Earn product is a debenture, those contraventions cannot be made out. Thus the proceeding should be dismissed with costs,” Justice Markovic said in her final ruling.

However, the Australian regulator is not convinced and is determined to move ahead with its appeal.

“ASIC has appealed this decision because it is concerned that the Finder Earn product was offered without the appropriate license or authorization and therefore without the benefit of important consumer protections,” the regulator added.

The data for the appeal to be heard in Federal Court is yet to be determined.