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Sydney-based crypto startup Web3 Ventures, trading as Block Earner, has lost its long-running legal battle with the Australian Securities and Investments Commission (ASIC) after the High Court ruled the company's former fixed-yield crypto product constituted a financial product under the Corporations Act.
The unanimous decision, handed down by a full bench of seven justices, overturns a Full Federal Court ruling from April last year that had gone in Block Earner's favour and marks a significant win for ASIC's push to bring crypto products within the existing regulatory perimeter.
While Block Earner co-founder and CEO Charlie Karaboga has acknowledged the decision, he says the case underscores the need for "proper legislative reform", adding that Block earner will "continue to engage constructively with ASIC and the regulatory process".
"However, it is important to highlight that this proceeding concerns a product that was voluntarily closed in 2022," says Karaboga.
“We continue to believe that legal clarity for Australia’s digital asset sector should come through proper legislative reform, not retrospective litigation.
"It is unfortunate that such significant questions about the application of financial services law to digital assets have had to be tested through enforcement against a small, innovative Australian startup.
“We’re excited about the future and remain committed to ongoing regulatory engagement and to contributing to the development of fair, forward-looking financial services laws in Australia.”
The case centred on Block Earner's "Earner" product, which offered customers a fixed 7 per cent annualised percentage yield on the USDC stablecoin and 4 per cent on other eligible cryptocurrencies between March and November 2022.
Block Earner did not hold an Australian Financial Services Licence for the product.
The High Court found the Earner product met the definition of a financial product on two separate grounds - as a facility through which customers made a "financial investment" under section 763B of the Corporations Act, and as a "derivative" under section 761D.
The court found that Block Earner's customers contributed money to acquire the product with the intention and expectation that they would receive a financial return, and that Block Earner had the primary responsibility for generating that return.
The court rejected the Full Federal Court's narrower interpretation that had distinguished the product from a managed investment scheme.
On the derivative finding, the High Court held that the Earner product's value was derived from the value of the underlying cryptocurrency, satisfying the statutory definition regardless of the product's fixed-rate structure.
The matter has been remitted to the Full Federal Court to determine penalties.
In a notable condition of the appeal, ASIC was ordered to pay Block Earner's costs of the High Court proceedings, a term agreed to when special leave was granted in August last year.
ASIC sees the appeal as a test case for the breadth of existing financial product definitions.
In seeking special leave, the regulator said it was pursuing clarity on "what falls within the definition of financial product", arguing the definition was "drafted in a broad and technology-neutral way" that should capture novel crypto products without the need for new legislation.
"ASIC welcomes this important decision which clarifies when products that provide a return fall within the existing financial services regulatory regime," says ASIC chair Sarah Court in a statement today.
"This reinforces ASIC’s long-standing position that the definition of financial product is broad and technology neutral and so captures new and emerging products without the need to amend the legislation."
The decision caps a legal saga that has wound through three levels of the federal court system.
ASIC initially succeeded at first instance, but Block Earner won a reversal at the Full Federal Court in April 2025, a ruling that was widely seen as a blow to the regulator's crypto enforcement strategy.
In May last year ASIC moved swiftly to seek special leave to appeal, signalling it viewed the Full Federal Court's interpretation as unacceptably narrow.
The news comes as Block Earner has pivoted its business model away from yield products.
The company was granted an Australian Credit Licence in May this year and has been building a crypto-backed home loan product. The licence marked the first time a digital asset platform in Australia had been regulated to provide credit products under its own licence.
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