Financial product comparison website Finder.com is being sued by Australia’s financial services regulator for allegedly offering a cryptocurrency yield-bearing product without the required license.
It’s the second local provider of a crypto yield product to be targeted by the regulator, following action against Block Earner in November
The Australian Securities and Investments Commission (ASIC) began court proceedings on Dec.15 against Finder.com’s subsidiary Finder Wallet,a locally registered digital currency exchange.
ASIC alleged that the Finder Earn product was an unlicensed financial product and that Finder Wallet breached product disclosure requirements and failed to comply with obligations pertaining to distributing financial products in a targeted manner.
Finder Earn offered users an annual yield of between 4.01% and 6.01% for depositing the Australian dollar-pegged stablecoin True AUD (TAUD).
ASIC claimed the product was a debenture — a debt instrument unbacked by collateral — which requires an Australian Financial Services (AFS) license.
It claimed that Finder Earn “exposed consumers to potential harm” as they may have been offered a product “not suitable for them.” Finder disagrees with this assessment.
“We do not share ASIC’s view that Finder Earn can be regarded as a debenture,” a Finder.com spokesperson told Cointelegraph.
“Since Finder Earn was launched in November 2021, we have proactively engaged with ASIC and have cooperated fully with all ASIC requests for information.”
Finder Earn was “sunset” on Nov. 24, which ASIC claimed was due to it notifying Finder Wallet of its concerns.
The Finder.com spokesperson claimed the decision to discontinue the product “was a strategic business decision” due to increased interest rates and “not brought on by regulatory review.”
“We were in the process of this sunset when we were notified [ASIC] might take a closer look,” they added.
Both ASIC and Finder.com’s spokesperson said that all user funds were fully returned following the termination of Finder Earn.
Finder said it “will not be commenting further as this matter is now before the courts” when questioned if it would contest the suit.
Sarah Court, ASIC’s deputy chair, said in the announcement that its “message to industry is clear — just because an offer involves a crypto-asset related product does not guarantee it will fall outside the current regulatory regime.”
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ASIC’s suit against Finder.com marks its third action in as many months against crypto financial products and the firms who provided them.
In November ASIC sued fintech firm Block Earner for similarly offering three crypto-backed fixed-yield earning products without an AFS license. In response to the suit, Block Earner’s CEO lashed out at the “lack of clarity” in the country’s financial licensing regime.
Financial services firm BPS Financial was sued by the regulator in October for “unlicensed conduct” related to its “Qoin” token, with alleged “misleading” representations that Qoin was regulated in Australia.
ASIC chair Joe Longo previously warned that “action will be taken” on firms that promote what he called “high-risk and niche” crypto investment products.