Australia Goes after Unlicensed Crypto Firms
Authorities have accused two of the digital asset firms of defrauding investors of approximately US$104M
April 13, 2024 04:42 PM
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TL;DR The Australian Securities and Investment Commission (ASIC) has initiated legal action against two cryptocurrency companies and their directors for operating without a license, leading to significant investor losses. Accusations include engaging in an elaborate scheme that resulted in losses amounting to AU$160 million.
The Australian financial watchdog, ASIC, has taken a significant step by commencing civil procedures against NGS Group companies and their directors, Brett Mendham, Ryan Brown, and Mark Ten Caten, for their involvement in unlicensed cryptocurrency operations.
These companies, including NGS Crypto, NGS Digital, and NGS Group, are accused of devising a scheme that defrauded investors of approximately AU$160 million ($104 million).
ASIC alleges that the NGS companies enticed Australian investors into purchasing blockchain mining packages promising fixed-rate returns, improperly advising them to funnel their self-managed super funds (SMSFs) into cryptocurrencies.
Established in 2018, NGS Crypto claims to assist members in generating consistent returns, a statement now under scrutiny by ASIC for lacking the required financial services licensing.
ASIC's Regulatory Stance "These proceedings should also send a message to the crypto industry that products will continue to be scrutinized by ASIC to ensure they comply with regulatory obligations and protect consumers," stated ASIC Chair Joe Longo.
He emphasized the regulator's commitment to consumer protection and legal compliance within the cryptocurrency sector.
To safeguard investor assets believed to be "at risk of dissipation," ASIC has successfully petitioned the Federal Court to appoint liquidators for the companies' digital assets and has barred Mendham from leaving Australia.
The move came after preliminary investigations revealed that over 450 Australians had invested AU$62 million ($41 million) through the NGS companies.
The situation with NGS Group is not isolated. DCA Capital, Digital Commodity Assets, and the Digital Commodity Assets Fund, managed by Ash Balanian, an alleged former NASA mission scientist, are also collapsing under similar accusations.
After investors raised concerns about irregularities and licensing deficiencies, the Australian Federal Court froze Balanian's assets and restricted his travel.
This case highlights the ongoing challenges and regulatory scrutiny facing the cryptocurrency industry in Australia.
