ASIC sues Finder Wallet for providing “unlicensed” financial services

ASIC sues Finder Wallet for providing “unlicensed” financial services

ASIC has filed civil penalty lawsuits in the Federal Court against Finder Wallet Pty Ltd, a division of comparison website, alleging that it provided financial services without a license, violated product disclosure laws, and disregarded design and distribution obligations (DDO) in connection to its cryptocurrency-related product Finder Earn.

According to the body, this event is ASIC’s third recent action against a business marketing a similar crypto-asset product they regard as a financial product.

Sarah Court, deputy chair of ASIC, further adds that: 

“Our message to the sector is clear: just because an offer incorporates a product connected to cryptocurrencies does not automatically mean that it will be exempt from the present regulatory framework.”

What did Finder Wallet do?

Finder Wallet made Finder Earn available from the end of February through November 10, 2022. Customers of Finder Earn made deposits into their accounts in Australian dollars, which were transformed into the stablecoin TAUD and sent to Finder Wallet for use as operating capital. Customers received an annual compounded return from Finder Wallet (in Australian dollars) of either 4.01% or, in some instances, 6.01% in exchange for allowing Finder Wallet to utilize their cash.

According to ASIC, the Finder Earn product was essentially a debenture. This is so that clients who placed money with Finder Wallet would eventually receive their money back and compensation for letting Finder Wallet utilize their capital.

ASIC, who again recently sued BFS financial institution, claims that Finder Wallet needed a financial services license in Australia because it was trading in financial products or giving advice when it offered Finder Earn. According to ASIC, providing Finder Earn without permission placed customers at risk, including the likelihood of being presented with an unsuitable service.

Finder Wallet did not adhere to DDO duties and disclosure 

According to Deputy Chair Court, Finder Wallet was required to adhere to disclosure and DDO duties since Finder Earn looked to be a financial product to safeguard customers. While concluding, Ms. Court claims that Finder Wallet neglected to take these steps, perhaps placing its clients in danger of damage,’

Following ASIC’s warning, Finder Wallet stopped selling Finder Earn, and all payments were fully refunded to clients. ASIC is asking the Court for declarations and monetary fines. The Court has not yet set a date for the initial case management hearing.

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