The High Court gives corporate regulator ASIC another crack at Block Earner

The Australian Securities & Investments Commission (ASIC) will get one more crack at cryptocurrency fintech, Block Earner, in a long-running dispute over one of its investment products after the High Court granted the regular special leave to appeal a Full Federal Court decision it lost.

It will be the fourth case in a two-year legal battle over a now defunct fixed-yield digital asset-related product, Earner.

ASIC says its ongoing battle is about getting a final call on the definition of a financial product and to clarify when interest-earning products and products involving a conversion of assets from one form into another are regulated.

The regulator’s view is that the definition of financial product was drafted in a broad and technology-neutral way, and it’s in the public interest to clarify this, because it applies to all financial products and services whether they involve digital assets or not.

The battle kicked off in 2023 when ASIC took legal action against Web3 Ventures, the company behind Block Earner, arguing that the digital currency exchange needed a financial services licence to offer Earner.

In February 2024, the Federal Court accepted the regulator’s argument about Earner was an issue and the business engaged it unlicenced financial services conduct, but subsequently dismissed another allegation by ASIC over Block Earner’s Access product. The court also relieved Block Earner from liability to pay a penalty for offering the Earner product.

ASIC appealed the penalty waiver and Block Earner cross-appealed the decision that it needed an Australian financial services licence licence (AFSL) to offer Earner.

In April, the Full Federal Court overturned the original decision, then dismissed ASIC’s appeal and accepted Block Earner’s cross-appeal.

Investors in Earner had offered fixed yield returns from different digital assets between March 2022 to November 2022.

The grant of special leave is conditional upon ASIC agreeing to pay Block Earner’s costs of the appeal. The regulator has 14 days to file a notice of appeal before a date is set for the matter to go before the High Court, most likely in the first half of 2026.

Block Earner CEO and cofounder said Charlie Karaboga said they respect the High Court’s decision to grant special leave and welcome the condition that ASIC pay costs related to the appeal.

“Clear regulations matter, and we hope this approach helps ensure important legal questions can be tested without placing disproportionate burdens on private companies such as Block Earner,” he said.

“Constructive engagement between regulators, innovators and the courts is essential to providing clear rules in a fast-changing environment. We remain confident in the Full Court’s judgment and committed to a responsible and transparent approach to financial services.”

In the meantime, Block Earner will get on with spending the $8 million Series A it raised last month.

The round was led by Hong Kong crypto investor CMCC Global’s Titan Fund, and supported by Sydney VC King River Capital at a $75 million valuation.

The High Court gives corporate regulator ASIC another crack at Block Earner

The Australian Securities & Investments Commission (ASIC) will get one more crack at cryptocurrency fintech, Block Earner, in a long-running dispute over one of its investment products after the High Court granted the regular special leave to appeal a Full Federal Court decision it lost.

Simon Thomsen

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