On April 22, Justices David O’Callaghan, Wendy Abraham, and Catherine Button ruled that Block Earner’s product was not a financial product, managed investment scheme, or derivative. The court said users lent their crypto under fixed terms, received interest payments, and did not share pooled assets or profits. Based on these terms, the product functioned as a loan, not as an investment scheme.
The court emphasized that customers had no exposure to Block Earner’s broader business operations. Instead, they received fixed interest in return for lending digital assets. As a result, the offering did not meet the definitions ASIC cited under financial law.
ASIC Must Cover Legal Costs After Failed Case
ASIC launched legal proceedings in November 2022. It argued that Block Earner needed an Australian Financial Services License (AFSL) to offer three fixed-yield crypto products. Block Earner shut down the Earner product once the case began.
A February 2024 ruling supported ASIC’s view but did not impose penalties. In June 2024, the court said Block Earner had “acted honestly” and relied on legal opinions before launching the product. ASIC appealed the no-penalty decision, but the latest ruling fully cleared Block Earner.
The court also ordered ASIC to pay legal costs for all hearings, including the appeal. In an April 22 release, ASIC stated it is “considering this decision” but did not offer further comment.
Block Earner Focuses on Crypto-Backed Loans
Block Earner has confirmed that the Earner product will not return, despite winning in court. James Coombes, Block Earner’s Chief Commercial Officer, said the product was clearly defined as a loan and did not involve shared profits.
“Our product was simply defined as one where customers would lend their assets to us for a fixed return,”
Coombes told.
“There was no share in the upside of the pool of assets and as such no Managed Investment Scheme existed.”
Coombes added that just because the product involved crypto assets did not change its legal definition. He confirmed that Block Earner will continue focusing on crypto-backed loans instead of fixed-yield offerings.
Block Earner’s legal win follows broader crypto regulation efforts in Australia. Government plans include new licensing rules for digital asset platforms and stricter measures to address debanking.
