Australian Investors Lose Over $104M as Crypto Firms Face ASIC Lawsuits
Summary:
The Australian Security and Investments Commission (ASIC) has initiated civil lawsuits against NGS Crypto Pty Ltd, NGS Digital Pty Ltd, and NGS Group Ltd, after their collapse resulted in Australian investors losing over A$160 million. The NGS companies are accused of inducing local investors to establish self-managed superannuation funds, turning these funds into cryptocurrency for blockchain mining investments. Around 450 investors allegedly entrusted a total of A$62 million to these companies, which operated without necessary Australian licensing. ASIC also moved to bar NGS companies from offering financial services without proper authorization.
Investors across Australia have lost over A$160 million ($104 million) as the result of the insolvency of two crypto-mining corporations, NGS Crypto Pty Ltd, NGS Digital Pty Ltd, and NGS Group Ltd, collectively known as the NGS companies. A report from April 12 reveals that the Australian Security and Investments Commission (ASIC) has initiated civil lawsuits against these businesses and their directors, namely Brett Mendham, Ryan Brown, and Mark Ten Caten.
The NGS companies stand accused of enticing Australian investors to set up self-managed superannuation funds (SMSFs), then converting these funds into cryptocurrency for investment in blockchain mining packages promising fixed-rate returns. Allegedly, around 450 individuals trusted these companies with a combined investment of A$62 million ($40 million). It's noteworthy that these operations unfolded without demanded Australian authorization.
The ASIC voiced apprehensions over the possibility of losing the digital assets committed to blockchain mining. Consequently, the Federal Court assigned liquidators specifically for managing the digital currency assets of the NGS companies. Brett Mendham is also now prohibited from exiting Australia.
In conjunction with this, ASIC is acting to bar the NGS companies from selling financial services in Australia without the appropriate approval. ASIC Chair Joe Longo warned Australians against committing their SMSFs to cryptocurrency, re-affirming ASIC’s dedication to scrutinize crypto products to safeguard investors through adhering to regulatory guidelines.
Meanwhile, other Australian crypto companies such as DCA Capital, Digital Commodity Assets Pty Ltd and the Digital Commodity Assets Fund face insolvency and federal court trials over investors' concerns about mismanagement, improper licensing, and possible transgressions of managed investment scheme regulations. Liquidators KordaMentha have identified debts amounting to A$100 million ($65 million) owed to about 100 investors. Assets of DCA Capital's director, Ashod Balanian, amounting to A$55 million ($36 million), have been seized by the Federal Court, and he has been ordered to hand over his passport.
Recently, Australian regulators have been paying more attention to the regulation of cryptocurrency. ASIC Commissioner Alan Kirkland articulated on March 21 the need to address the "regulatory trilemma" concerning consumer protection, maintaining market integrity, and promoting financial innovation.
Recently, Australia has been identified as a country on the brink of a significant shift in terms of demand for crypto. Although institutional crypto demand remains low locally, the rise of stablecoins and favourable policy adjustments could trigger growth.
Published At
4/12/2024 12:26:19 PM
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