The ASIC has launched civil proceedings following the liquidating of two cryptocurrency mining companies, NGS Crypto Pty Ltd, NGS Digital Pty Ltd, and NGS Group Ltd.
The agencies and their directors, Brett Mendham, Ryan Brown, and Mark Ten Caten, were subject to civil proceedings initiated by the Australian Securities and Investments Commission (ASIC), as reported on April 12.
NGS firms have faced allegations that they coerce local investors into establishing self-managed superannuation funds (SMSFs), which they convert to cryptocurrency to finance investments in blockchain mining packages that offer guaranteed fixed-rate returns.
According to the ASIC, an estimated 450 investors placed a combined A$62 million ($40 million) in trust with these organizations, which also functioned without the requisite Australian license.
The financial oversight body petitioned the Federal Court to appoint liquidators to oversee the digital currency holdings of NGS companies, citing concerns over the possible depletion of assets invested in blockchain mining. Also prohibited from departing Australia is Mendham.
Furthermore, ASIC has prohibited NGS firms from providing unauthorized financial services in Australia.
ASIC Chair Joe Longo warned Australians about the investment of SMSFs in cryptocurrencies. He also reaffirmed the commission’s dedication to thoroughly examining crypto products to guarantee investor protection via adherence to regulatory requirements.
Additionally, liquidation and federal court proceedings are underway against the Digital Commodity Assets Fund, DCA Capital, and Digital Commodity Assets Pty Ltd, all Australian cryptocurrency entities.
The course of action was in response to investor apprehensions regarding mismanagement, inadequate licensing, and possible violations of managed investment scheme regulations.
Appointed as liquidators, KordaMentha has identified A$100 million ($65 million) in obligations owed to one hundred investors. Ashod Balanian, a director of DCA Capital, has had $406 million worth of assets frozen by the Federal Court and is required to forfeit his passport.
In the last few months, Australian regulators have emphasised the country’s cryptocurrency regulatory environment more. ASIC Commissioner Alan Kirkland emphasised on March 21 the importance of resolving the “regulatory trilemma” concerning financial innovation: promoting financial innovation, ensuring market integrity, and safeguarding consumer interests.
According to some analysts, cryptocurrency demand has recently reached an “inflexion point” in Australia. Local demand for institutional cryptocurrencies remains sluggish, but stablecoins and receptive policy changes may ignite a movement.
