Australian regulators bust unlicensed blockchain mining companies

Savannah Fortis14 hours agoAustralian regulators bust unlicensed blockchain mining companiesASIC launched civil proceedings against two Australian cryptocurrency firms, NGS and DCA Capital, following a collapse as investors are still owed over $160 million.5477 Total views13 Total sharesListen to article 0:00NewsOwn this piece of crypto historyCollect this article as NFTJoin us on social networksHundreds of Australian investors are more than 160 million Australian dollars ($104 million) out of pocket after three cryptocurrency mining companies, NGS Crypto Pty Ltd, NGS Digital Pty Ltd and NGS Group Ltd (collectively “NGS companies”) collapsed into liquidation.

According to an April 12 report, the Australian Security and Investments Commission (ASIC) launched civil proceedings against the companies and their directors, Brett Mendham, Ryan Brown and Mark Ten Caten.

The NGS companies have been accused of targeting local investors to establish self-managed superannuation funds (SMSFs) and then convert the funds into cryptocurrency for investment in blockchain mining packages with promised fixed-rate returns.

The ASIC alleges that approximately 450 investors entrusted a total of 62 million AUD ($40 million) to these companies, which also operated without the necessary Australian license.

The financial watchdog expressed concern over the potential dissipation of digital assets invested in blockchain mining and successfully petitioned the Federal Court to appoint liquidators specifically for NGS companies’ digital currency holdings. Mendham has also been barred from leaving Australia.

Additionally, ASIC has moved to prevent NGS companies from offering financial services in Australia without proper authorization.

Related: Australians wouldn’t value retail CBDC for its privacy or safety, RBA finds

ASIC Chair Joe Longo cautioned Australians against investing their SMSFs in cryptocurrency and reiterated the commission’s commitment to scrutinizing crypto products to ensure investor protection through regulatory compliance.

Meanwhile, fellow Australian cryptocurrency entities DCA Capital, Digital Commodity Assets Pty Ltd and the Digital Commodity Assets Fund are also facing liquidation and federal court proceedings.

Concerns from investors regarding mismanagement, lack of proper licenses and potential breaches of managed investment scheme regulations prompted the action.

KordaMentha, appointed as liquidators, has discovered debts totaling 100 million AUD ($65 million) owed to 100 investors. The federal court has frozen the assets of DCA Capital’s director, Ashod Balanian, amounting to 55 million AUD ($36 million), and he has been instructed to surrender his passport.

Regulators in Australia have been giving more attention to its crypto regulatory landscape over the past couple of months. On March 21, ASIC Commissioner Alan Kirkland highlighted the need to solve the “regulatory trilemma” for financial innovation, including consumer protection, market integrity and encouraging financial innovation.

Australia has recently been called a country poised for an “inflection point” of crypto demand. While the local demand for institutional crypto still lags, stablecoins and welcoming policy moves could spark a movement.

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