Block Earner, a crypto-based startup, will not face penalties for its yield-bearing product, “Earner,” due to its honest efforts to engage with the government over regulatory matters. This decision came after an Australian judge criticized the Australian Securities and Investment Commission (ASIC) for publishing a misleading press release about the legal proceedings.
Legal Dispute and Court Ruling
ASIC sued Block Earner in 2022, claiming that two of its products, Earner and Access, required financial services licenses. While the court ruled in February that the Earner product was unlicensed, it determined that the DeFi “Access” service did not need a license and could continue to operate.
Despite this, ASIC issued a press release titled “Court finds Block Earner crypto product needs financial services licence,” which Judge Ian McNeil Jackman deemed “unfair and misleading.” He upheld Block Earner’s claim that the release misrepresented the court’s findings. Consequently, ASIC was ordered to pay some of Block Earner’s legal costs.
Honest Engagement with Regulators
Judge Jackman also found that Block Earner should not be penalized for its Earner product because the company had acted in good faith by seeking to engage with regulatory authorities. This engagement demonstrated Block Earner’s commitment to navigating the complex regulatory landscape of crypto-related products and services.
Industry Reactions
Michael Bacina, Chair of Blockchain Australia, supported the court’s decision, emphasizing the importance of legal advice in the evolving crypto sector. “The court rightly calls out ‘a deeper issue’ that the ‘rules of the legal system are promulgated and clear,’” Bacina said. He added that seeking legal advice is crucial for crypto projects to avoid legal infringements and to argue for relief from penalties if their innovative products are found to be in violation of unclear regulations.
