Australian Regulator Scolded Over ‘Misleading’ Release, Must Pay Costs as Block Earner Avoids Penalty

• ASIC sued Block Earner over two of its products – Earner and Access.

• ASIC subsequently published a release entitled “Court finds Block Earner crypto product needs financial services licence.”

• While the release acknowledged that ASIC had been unsuccessful in arguing that Access needed a license, the judge upheld Block Earner’s claim that the release was “unfair and misleading.”

An Australian judge ordered the country’s financial regulator to pay some of the costs of a legal dispute with crypto-based startup Block Earner and chided it for publishing a “misleading media release.”

The rebuke follows a February ruling by Judge Ian McNeil Jackman that Block Earner’s yield-bearing “Earner” product was unlicensed while its DeFi “Access” service did not need the same licensing and could continue to be offered. The Australian Securities and Investment Commission (ASIC) sued Block Earner over the two products in 2022.

ASIC subsequently published a press release entitled “Court finds Block Earner crypto product needs financial services licence.” While the release acknowledged that ASIC had been unsuccessful in arguing that Access needed a license, Jackman upheld Block Earner’s allegation that it was “unfair and misleading.”

Jackman also determined that the fintech company should be relieved of paying a penalty for Earner because it acted honestly in seeking to engage with the government over regulation of crypto-related products and services. ASIC was ordered to pay costs incurred by Block Earner after the federal court’s Feb. 9 judgement.

“The court rightly calls out ‘a deeper issue’ that the ‘rules of the legal system are promulgated and clear’ noting that obtaining legal advice in an emerging area like crypto will support an argument for relief from a penalty,” Blockchain Australia Chair Michael Bacina said in a statement.

“Crypto projects which charge ahead without seeking proper legal advice not only risk their products infringing the law, but also remove a potential argument for relief of a penalty in the event an innovative product in an area of unclear guidance end up being found to be infringing.”

UPDATE (June 4, 9:24 UTC): Shortens wording in bullet points.