The Australian Securities and Investments Commission (ASIC) has received a nod from a Federal Court to appoint receivers for digital assets held by a group of collapsed crypto mining companies and their sole owners.
ASIC Takes Action Against Collapsed Crypto Mining Companies
ASIC launched civil proceedings against three crypto-mining firms, collectively known as NGS Companies. The proceedings also included the directors of these mining schemes: Brett Mendham, Ryan Brown, and Mark Ten Caten.
We have commenced civil proceedings against #blockchain mining companies NGS Crypto, NGS Digital and NGS Group – and their directors – for allegedly providing financial services without a licence https://t.co/Hgwk81V5TD pic.twitter.com/XpKcXCBZxt
— ASIC Media (@asicmedia) April 12, 2024
According to a Friday statement from ASIC, the court order also restrained Brett Mendham from traveling outside Australia. The regulator applied for these orders because it thinks investors in these crypto-mining schemes “are at risk of dissipation.”
Crypto Mining Collapse Leaves Investors $41 Million in the Red
The crypto mining firms collapsed into liquidation owing 450 investors more than USD $41 million. The companies allegedly targeted investors to establish self-managed super funds (SMSFs) and then converted them into cryptocurrency.
“ASIC alleges in the proceedings that the NGS Companies contravened section 911A of the Corporations Act by providing financial services without an Australian financial services license,” the release read.
The regulator is now holding the companies accountable for illegally marketing investment products backed by crypto mining.
ASIC Chair Joe Longo warned investors to consider risks before using their SMSF to invest in crypto-related investments like mining.
“These proceedings should also send a message to the crypto industry that products will continue to be scrutinized by ASIC to ensure they comply with regulatory obligations in order to protect consumers,” he said.
Three Other Crypto Funds Thrust Into Liquidation in Australia
In addition to NGS Companies, fellow crypto funds in Australia – DCA Capital, Digital Commodity Assets, and the Digital Commodity Assets Fund – have been forced into liquidation.
Following a collapse of these crypto funds all within a week, the schemes potentially owe more than $150 million to investors. A Federal Court has appointed liquidators from KordaMentha to the three firms operated by Balanian that offered cryptocurrency investments.
Additionally, liquidators are tasked to investigate and uncover more investors. Despite the allegations, the Balanian team has yet to respond.
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