Australia’s federal court has relieved fintech firm Block Earner from paying a fine despite the court finding it offered a crypto yield-bearing product without a financial services license.
Justice Ian Jackman ruled on June 4 that Block Earner “acted honestly,” and at the time its yield-bearing “Earner” product launched, it did consider getting licensed, but its research and legal advice concluded it didn’t need one.
Block Earner founder and CEO Charlie Karaboga told Cointelegraph that getting a legal opinion before it launched the product “showed that we acted honestly and did everything that we could do as a startup.”
He refrained from calling it a “fair ruling” — explaining that the only “silver lining” was that it didn’t need to pay a penalty. Karaboga said the firm still suffered “reputational damage” from the case and has “lost a lot of money” on legal fees.
Justice Jackman shot down ASIC’s ask for a $234,000 (350,000 Australian dollars) fine. Block Earner asked for a $40,000 (60,000 Australian dollars) penalty — three times the amount it earned from the product that it was sued over.
The Australian Securities and Investments Commission (ASIC) said in a June 4 press release that it is reviewing the decision.
In February, Justice Jackman ruled that Block Earner’s “Earner” products it offered in 2022 — giving yield on loans in USD Coin (USDC), Bitcoin (BTC), Ether (ETH) and PAX Gold (PAXG), needed an Australian Financial Services License (AFSL).
The company’s “DeFi Access” product — which facilitates the use of the lending protocol Aave — escaped punishment as the court found it didn’t operate under a managed investment scheme, so no AFSL was needed.
Related: Australian court rules against Qoin issuer BPS Financial on 4 charges
ASIC sued Block Earner in November 2022, alleging both the Earner and DeFi Access products needed a license as they were managed investment schemes — when a fund pools investor money and uses it to buy assets.
The Earner product operated from March 17, 2022, to Nov. 16 that year after Block Earner ended it prior to the court proceedings
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