In the aftermath of a collapse, with investors still due more than $160 million, ASIC initiated legal actions against NGS and DCA Capital, two cryptocurrency enterprises based in Australia.
After three cryptocurrency mining firms, NGS Crypto Pty Ltd, NGS Digital Pty Ltd, and NGS Group Ltd (collectively “NGS companies”), went bankrupt, hundreds of Australian investors lost over $140 million ($104 million).
The firms and their directors, Brett Mendham, Ryan Brown, and Mark Ten Caten, were subject to legal actions initiated by the Australian Security and Investments Commission (ASIC), as reported on April 12.
Local investors have claimed that NGS businesses are luring them into self-managed superannuation funds (SMSFs) so they may invest in blockchain mining packages that guarantee fixed-rate returns in cryptocurrencies.
In addition to operating without the required Australian license, the ASIC claims that these businesses misappropriated a total of forty million Australian dollars (or 62 million AUD) from over four hundred and fifty investors.
Concerned about the possible loss of digital assets held by blockchain mining businesses, the financial watchdog petitioned the Federal Court to designate liquidators for the digital currency assets of NGS enterprises. The court granted the request. Additionally, Mendham is no longer allowed to leave Australia.
Furthermore, ASIC has taken action to ensure that NGS firms cannot provide financial services in Australia without the necessary authorization.
Australian Securities and Investments Commission (ASIC) Chair Joe Longo has issued a warning to SMSF holders against putting their funds into cryptocurrencies and has reaffirmed the commission’s intention to thoroughly examine cryptocurrency products to guarantee that they comply with regulations and safeguard investors.
Federal court actions and liquidation are also pending for three more Australian cryptocurrency entities: DCA Capital, Digital Commodity Assets Pty Ltd, and the Digital Commodity Assets Fund.
The investors’ worries about possible violations of managed investment scheme legislation, improper licensing, and mismanagement led to the action.
Appointed liquidators KordaMentha have found 100 investors due 65 million Australian dollars ($100 million). A federal court has ordered Ashod Balanian, director of DCA Capital, to hand up his passport and has frozen his assets totaling 55 million AUD ($36 million).
In recent months, Australian regulators have begun to pay more attention to the country’s cryptocurrency regulatory situation. Alan Kirkland, commissioner of ASIC, brought attention to the “regulatory trilemma” for financial innovation on March 21. This trilemma involves promoting innovation while simultaneously protecting consumers and maintaining market integrity.
Some have speculated that Australia may soon see a “inflection point” in the desire for cryptocurrency. Local demand for institutional cryptocurrency is low, but stablecoins and positive regulatory changes may change that.
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