The Australian Securities and Investments Commission (ASIC) has been granted permission by a Federal Court to appoint receivers for digital assets held by a group of collapsed crypto mining companies and their sole owners. ASIC initiated civil proceedings against three crypto-mining firms collectively known as NGS Companies, as well as their directors Brett Mendham, Ryan Brown, and Mark Ten Caten. The court order also included a restriction on Brett Mendham from traveling outside Australia, with ASIC expressing concerns about potential dissipation of investor funds.
The collapse of the crypto mining companies has left investors in the red by more than $41 million, with the firms allegedly targeting investors to establish self-managed super funds (SMSFs) and then converting them into cryptocurrency. ASIC has accused the NGS Companies of violating section 911A of the Corporations Act by providing financial services without the necessary Australian financial services license. The regulator is holding these companies accountable for illegally marketing investment products backed by crypto mining, urging investors to carefully consider risks before using their SMSFs to invest in crypto-related products.
In addition to the NGS Companies, three other crypto funds in Australia – DCA Capital, Digital Commodity Assets, and the Digital Commodity Assets Fund – have been forced into liquidation. These firms potentially owe investors more than $150 million, with KordaMentha appointed as liquidators by a Federal Court to investigate and uncover additional investors. Despite the allegations against the firms operated by Balanian, their team has not yet responded to the situation.
ASIC Chair Joe Longo emphasized the importance of protecting consumers and ensuring compliance with regulatory obligations within the crypto industry. He highlighted the ongoing scrutiny of products by ASIC to safeguard consumers and warned investors to be cautious when considering using their SMSFs to invest in crypto-related ventures such as mining. The actions taken by ASIC in these cases serve as a message to the crypto industry about the regulatory oversight and obligations that need to be adhered to in order to protect investors.
The appointment of receivers by ASIC for the digital assets of collapsed crypto mining companies represents a significant step in addressing the issues faced by investors who have suffered losses due to the collapse of these firms. The regulatory actions taken by ASIC against the NGS Companies and other crypto funds in Australia underscore the importance of compliance with financial regulations and the need to protect investors from potential risks associated with investing in cryptocurrencies. The liquidators appointed to investigate the collapsed crypto funds aim to uncover the extent of investor losses and determine the appropriate course of action to address the situation.
