Financial product comparison website Finder.com is being sued by Australia’s financial services regulator for allegedly offering a cryptocurrency-yielding product without the required license.
It is the second local provider of a crypto performance product targeted by the regulator, following the action against Block Earner in November.
The Australian Securities and Investments Commission (ASIC) commenced court proceedings on December 15 local time against Finder.com’s subsidiary and locally registered digital currency exchange Finder Wallet.
ASIC claimed that the Finder Earn product was an unlicensed financial product and that Finder Wallet breached product disclosure requirements and failed to comply with obligations related to the distribution of financial products specifically.
Finder Earn offered users an annual return of between 4.01% and 6.01% for depositing the Australian dollar-pegged True AUD (TAUD) stablecoin.
ASIC claimed the product was a bond, unsecured debt instrument, which required a license from the Australian Financial Services (AFS).
He claimed that Finder Earn “exposed consumers to potential harm” as they may have been offered a product “not right for them.” Finder disagrees with this assessment.
“We do not share ASIC’s view that Finder Earn can be considered an obligation,” a Finder.com spokesperson told Cointelegraph.
“Since Finder Earn launched in November 2021, we have proactively engaged with ASIC and have fully cooperated with all ASIC information requests.”
Finder Earn went “sunset” on November 24, which ASIC says was because it notified Finder Wallet of its concerns.
The Finder.com spokesperson stated that the decision to discontinue the product “was a strategic business decision” due to rising interest rates and “not triggered by a regulatory review.”
“We were in the process of this sunset when we were notified [ASIC] I could take a closer look,” they added.
Both ASIC and the Finder.com spokesperson said that all user funds were returned in full following the termination of Finder Earn.
Finder said he “will not comment further as this matter is now before the courts” when asked if he would contest the lawsuit.
Sarah Court, vice president of ASIC, said in the announcement that her “message to the industry is clear: just because an offering involves a crypto-asset-related product does not guarantee that it will fall outside of the current regulatory regime.”
Related: Australian ‘Token Mapping’ Consultation Paper Due In Early 2023: Treasurer
The ASIC lawsuit against Finder.com marks its third action in as many months against crypto financial products and the companies that provided them.
In November, ASIC sued fintech firm Block Earner for similarly offering three cryptocurrency-backed fixed-yield products without an AFS license. In response to the lawsuit, the Block Earner CEO lashed out at the “lack of clarity” in the country’s financial licensing regime.
Financial services firm BPS Financial was sued by the regulator in October for “unlicensed conduct” related to its “Qoin” token, with alleged “misleading” representations that Qoin was regulated in Australia.
ASIC Chairman Joe Longo previously warned that “action will be taken” on companies promoting what he called “high-risk and niche” crypto investment products.
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