Finder just had a big win against the corporate cop, ASIC, over its crypto wallet

- March 14, 2024 2 MIN READ
Finder CEO and cofounder Frank Restuccia
Finder’s crypto product, Earn, complied with the financial law, the Federal Court has found, dismissing legal action launched by the corporate regular against the fintech.

It was a comprehensive win against the Australian Securities and Investments Commission (ASIC) for Finder, with Justice Brigitte Markovic also awarding costs against the regulator.

ASIC sued Finder Wallet for alleged ‘unlicensed conduct’ over Earn late last year, just weeks after Finder announced in late November that it was shutting down its fixed return stablecoin product as it “no longer” served customers amid rising interest rates.

The regulator’s case alleged that Finder Wallet contravened the Corporations Act by carrying on a financial services business without holding an Australian Financial Services Licence (AFSL) and by offering a debenture without a disclosure document or a target market declaration.

But ASIC’s claim that Finder Earn was a debenture was rejected by the court.

The legal action was interesting as the first time the legal definition of a debenture in relation to cryptocurrency was tested in an Australian court.

“ASIC has not established that the Finder Earn product is a debenture within the meaning of a s 9 of the Corporations Act,” Justice Markovic wrote in her judgment.

“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.”

Finder’s Global CEO and cofounder, Frank Restuccia, welcomed the decision.

“We are proud to have developed Finder Earn as a way for Australians to earn yield on their cryptocurrency investments in what was an ultra-low interest rate environment,” he said.

“We are delighted with this outcome, which confirms that Finder was compliant with our regulatory obligations in offering Finder Earn to our customers.

“We understand and respect the importance of good regulation to protect consumers and we engaged openly and proactively with ASIC from the outset.”

His cofounder and crypto enthusiast Fred Schebesta said:“innovation always moves faster than regulation” and the ASIC case wass a great example of that.

“It highlights the need for more open communication between innovators and regulators, to navigate emerging sectors by ensuring a collaborative approach to both progress and compliance,” he said.

Following the decision, ASIC executive director enforcement and compliance Tim Mullaly said the regulator will consider the judgment.

“ASIC pursued this matter because we considered that this product was being offered without the appropriate licence or authorisation and therefore without the benefit of important consumer protections,” he said.

ASIC has 28 days to lodge an appeal if it decides to.

The win for Finder comes less than a month after the comparison site cut staffing for the 3rd time in 12 months, shedding 60 jobs.