Financial product comparison website Finder.com is being sued by Australiaโs financial services regulator for allegedly offering a cryptocurrency yield-bearing product without the required license.
Itโs the second local provider of a crypto yield product to be targeted by the regulator, following action against Block Earner in November
The Australian Securities and Investments Commission (ASIC) began court proceedings on Dec.15 local time against Finder.comโs subsidiary and locally registered digital currency exchange Finder Wallet.
ASIC alleged the Finder Earn product was an unlicensed financial product and that theFinder Wallet breached product disclosure requirements and failed to comply with obligations pertaining to distributing financial products in a targeted manner.
Finder Earn offered users an annual yield of between 4.01% and 6.01% for depositing the Australian dollar-pegged stablecoin True AUD (TAUD).
ASIC claimed the product was a debenture โ a debt instrument unbacked by collateral โ which required an Australian Financial Services (AFS) license.
It claimed that Finder Earn โexposed consumers to potential harmโ as they may have been offered a product โnot suitable for them.โ Finder disagrees with this assessmen.
โWe do not share ASICโs view that Finder Earn can be regarded as a debenture,โ a Finder.com spokesperson told Cointelegraph.
โSince Finder Earn was launched in November 2021, we have proactively engaged with ASIC and have cooperated fully with all ASIC requests for information.โ
Finder Earn was โsunsetโ on Nov. 24 which ASIC claimed was due to it notifying Finder Wallet of its concerns.
The Finder.com spokesperson claimed the decision to discontinue the product โwas a strategic business decisionโ due to increased interest rates and โnot brought on by regulatory review.โ
โWe were in the process of this sunset when we were notified [ASIC] might take a closer look,โ they added.
Both ASIC and Finder.comโs spokesperson said all user funds were fully returned following the termination of Finder Earn.
Finder said it โwill not be commenting further as this matter is now before the courtsโ when questioned if it would contest the suit.
Sarah Court, ASICโs deputy chair, said in the announcement that its โmessage to industry is clear โ just because an offer involves a crypto-asset related product does not guarantee it will fall outside the current regulatory regime.โ
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ASICโs suit against Finder.com marks its third action in as many months against crypto financial products and the firms who provided them.
In November ASIC sued fintech firm Block Earner for similarly offering three crypto-backed fixed-yield earning products without an AFS license. In response to the suit Block Earnerโs CEO lashed out at the โlack of clarityโ in the countryโs financial licensing regime.
Financial services firm BPS Financial was sued by the regulator in October for โunlicensed conductโ related to its โQoinโ token, with alleged โmisleadingโ representations that Qoin was regulated in Australia.
ASIC chair, Joe Longo, previously warned that โaction will be takenโ on firms who promote what he called โhigh-risk and nicheโ crypto investment products.
