An Australian federal court has dismissed a lawsuit bought by the country’s corporate regulator against a sister company of Australian fintech firm Finder.com, after finding its yield-bearing product Finder Earn was compliant with financial laws.
In a March 14 order, Justice Brigitte Markovic ruled that the Australian Securities and Investments Commission (ASIC) “has not established that the Finder Earn product is a debenture” under the Corporations Act — a debt security where companies promise to pay back borrowed money with interest.
“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 ruled.
In December 2022, ASIC sued Finder subsidiary Finder Wallet alleging its Finder Earn product was an unlicensed financial product and required the exchange to hold a financial services license.
Finder “sunset” the product a month earlier, which ASIC claimed was due to it notifying Finder Wallet of its concerns, but a spokesperson told Cointelegraph at the time that it was “a strategic business decision” due to increased interest rates and “not brought on by regulatory review.”
A Finder spokesperson told Cointelegraph the order was “definitely a landmark win.”
Asked whether Finder would consider relaunching the Earn product, the spokesperson said there were no plans at this time, reiterating that the decision to close the product was due to rising interest rates at the time, rather than any regulatory action.
In a March 14 blog post, Finder Global CEO and co-founder Frank Restuccia stated the firm is “delighted with this outcome, which confirms that Finder was compliant with our regulatory obligations.”
“We understand and respect the importance of good regulation to protect consumers and we engaged openly and proactively with ASIC from the outset,” Restuccia added.
In a March 14 statement, ASIC executive director of enforcement and compliance Tim Mullaly said the regulator pursued the matter as it “considered that this product was being offered without the appropriate license or authorization and therefore without the benefit of important consumer protections.”
The statement adds ASIC will “consider the judgment carefully.” noting it has 28 days to lodge an appeal bid to the Full Federal Court, which comprises three judges.
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It comes just over a month after ASIC was handed a partial federal court win in its action against crypto yield platform Block Earner.
In that case, Justice Jackman — actor Hugh Jackman’s brother — ruled Block Earner would face penalties for its yield-bearing Earner product, finding it needed a financial services license.
Jackman stopped short of classifying Block Earner’s DeFi “Access” product as needing a license, saying it didn’t operate under a managed investment scheme.
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