ASIC has commenced civil penalty proceedings in the Federal Court against Finder Wallet for allegedly providing unlicensed financial services, breaching product disclosure requirements, and failing to comply with Design and Distribution Obligations concerning its crypto-asset-related product, Finder Earn.
Finder Wallet is a subsidiary of comparison website Finder.
Finder Earn customers deposited Australian dollars into their accounts, which were then converted to an Australian dollar-denominated ‘stablecoin’ called TAUD and allocated to Finder Wallet to use for its own working capital. Finder Wallet paid customers (in Australian dollars) an annual compounding return of 4.01 per cent or 6.01 per cent in exchange for using their funds by Finder Wallet.
ASIC alleges that the product was, in substance, a debenture. This is because customers deposited money with Finder Wallet on the understanding that their money would ultimately be repaid with a return for allowing Finder Wallet to use their capital.
The regulator also alleges that Finder Wallet required an AFSL to offer Finder Earn, because it provided financial product advice or dealt in a financial product. ASIC contends that offering Finder Earn without a licence exposed consumers to potential harm, including the possibility that they were offered a product that was not suitable for them.
After ASIC notified Finder Wallet of its concerns, Finder Wallet ceased offering Finder Earn on 24 November 2022 and all funds were returned to customers in full.
ASIC is seeking declarations and pecuniary penalties from the court.
The date for the first case management hearing is yet to be scheduled by the court.
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