According to local reports, the Australian Securities and Investments Commission (ASIC) has initiated legal proceedings against two crypto companies and their directors for exploitation. without license in the country. The companies allegedly participated in a complex scheme that resulted in a loss of A$160 million, worth $104 million, to investors.
ASIC after unlicensed mining companies
The Australian regulator has initiated civil proceedings against the NGS group companies and their directors, Brett Mendham, Ryan Brown and Mark Ten Caten. NGS Blockchain crypto mining companies include NGS Crypto, NGS Digital, and NGS Group.
ASIC alleged that NGS companies have targeted Australian investors to acquire blockchain mining packages with a fixed rate return. The regulator also accuses the firms of allegedly encouraging investors to use self-managed super funds (SMSFs) and convert the money into crypto.
According to NGS Crypto website, the company was established in 2018 as a blockchain company. As part of the NGS Group, the company “aims to help its members generate consistent returns”.
The Australian regulator said in its press release that these financial services are provided without proper licensing. For this reason, ASIC is seeking “interim and final injunctions against the NGS companies”.
ASIC Chairman Joe Longo has urged Australian users to consider the risks of self-managing SMSFs before using the funds to invest in crypto-related investment products like those offered by the group NSW.
Additionally, the ASIC Chairman warned the industry about the regulator’s standards for scrutiny of crypto products:
These procedures should also send a message to the crypto industry that products will continue to be reviewed by ASIC to ensure they comply with regulatory obligations to protect consumers.
The Australian regulator has asked the Federal Court to appoint liquidators responsible for the companies’ digital assets. The request was made because the regulator believed the investor’s assets were at risk of dissipation.
Wednesday, the tribunal approved the request and prevented Mendham from leaving the country. Preliminary investigations revealed that more than 450 Australians invested A$62 million, or approximately $41 million, through NGS companies.
Crypto funds destroyed for irregularities
Likewise, more than 100 investors are owed more than A$100 million, or about $64.6 million, from DCA Capital, Digital Commodity Assets and the collapsing Digital Commodity Assets Fund.
Recently, investigations began after investors exposed crypto funds managed by Ash Balanian, an alleged former NASA mission scientist. As a result, liquidators were appointed to the three companies managed by Balanian.
According to report, the fund was aimed at wealthy investors, requiring a minimum deposit of AU$50,000. Investors discovered irregularities in the management of the fund, which led to the intervention of the authorities.
Many investors were concerned because they believed that funds failed to hold required licenses and “violated managed investment program requirements.”
On Wednesday, the Australian Federal Court ordered Balanian’s assets worth A$55 million to be frozen and the crypto fund manager to surrender his passport.
Crypto total market cap sitting at $2.55 trillion. Source: TOTAL on Tradingview
Featured image from Unsplash.com, chart from TradingView.com
