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Cryptocurrency trading app Block Earner has been brought back into the legal fold after winning a groundbreaking case earlier this year, with the nation's corporate watchdog appealing the decision to relieve the fintech of liability for providing unlicenced financial services through its 'Earner' product over the course of 2022.
While the Federal Court found the company's contraventions in offering the USD Earner, Gold Earner and Crypto Earner without a licence to be serious, Block Earner's liability was relieved as the judge found it had acted honestly and not carelessly.
"From the beginning, it was never our intention to break or circumvent the rules,” Block Earner co-founder and CEO Charlie Karaboga said after the ruling.
"As a startup, we did everything within our power to comply, including obtaining legal advice and creating a comprehensive risk framework."
The Australian Securities and Investments Commission (ASIC), which brought the action against Block Earner in 2022, is clearly not satisfied with the result and has appealed the decision.
ASIC argues that imposing no penalty "failed to give effect to the purposes of specific and general deterrence", while also alleging that liability should not be relieved given Block Earner made a profit from the contraventions found by the court.
The regulator alleges Block Earner "perceived significant uncertainty but deliberately engaged in conduct in the field of endeavour for a profit-making purpose", and claims that the judge erred in inferring the startup "relied on legal advice in forming a view that there was no identified risk that the Earner product would breach any laws or regulations when it did not lead evidence to that effect".
In the previous ruling ASIC was ordered to pay Block Earner's costs. Now the regulator is urging the court to order that each party pay their own costs, and that the fintech be given a pecuniary penalty of $350,000 "or such other amount the court sees fit".
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