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Block Earner did not have to pay a penalty because it attempted to communicate honestly with the government regarding the regulation of crypto-related products and services.
The Australian Securities and Investments Commission (ASIC) had sued the company over two of Block Earner’s products – Earner and Access. However, ASIC’s press release titled “Court rules Block Earner crypto product needs financial services licence” was published despite the court stating that the Access product did not need a licence. Block Earner claimed this statement was “unfair and misleading” and judge Ian McNeil Jackman accepted the claim.
Warning from judge to ASIC
An Australian judge has ordered the country’s financial regulator to pay some costs and reprimanded it for a “misleading press release” it issued in a legal dispute with crypto-based startup Block Earner.
This warning follows a ruling by judge Ian McNeil Jackman in February, which stated that Block Earner’s yield-generating “Earner” product was unlicensed, but its DeFi “Access” service did not need the same license and could continue to be offered. ASIC sued Block Earner in 2022 over these two products.
Block Earner’s Position in the Case
Jackman ruled that Block Earner should be exempt from paying penalties for its Earner product because the company had honestly attempted to engage with the government regarding the regulation of crypto-related products and services. Following the federal court’s ruling on 9 February, ASIC was ordered to pay costs incurred by Block Earner.
“The court correctly points out that seeking legal advice in an emerging field like crypto will support an argument for immunity from penalty, highlighting that the rules of the legal system are clear and distinct,” said Michael Bacina, President of Blockchain Australia.
“Crypto projects that proceed without appropriate legal advice not only run the risk of their products violating the law, but also remove an argument for immunity from punishment if an innovative product in an unclear area is found to violate the law,” Bacina said.
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