- Australia’s Federal Court ruled Block Earner’s discontinued crypto lending product didn’t qualify as a managed investment scheme, overturning ASIC’s original claims.
- The court dismissed ASIC’s appeal and ordered it to pay Block Earner’s legal costs, clearing the company of operating an unlicensed financial service.
- Block Earner’s founders said they acted in good faith, aiming to align their product with outdated regulatory frameworks despite ASIC’s aggressive stance.
Australia’s Full Federal Court has ruled in favour of crypto lender Block Earner, overturning a previous decision that its now-discontinued “Earner” product was an unlicensed financial service.
If you don’t remember Block Earner, neither do I, but that’s because the legal conflict dates back to late 2022, when the firm launched the Earner program, which allowed customers to lend crypto assets to the platform in exchange for a fixed interest return.
The Australian Securities and Investment Commission (ASIC) stated that this program constituted an unlicensed financial service. It accused the platform of operating an unregistered managed investment scheme, or something along those lines.
Fast-forward to April 2025, the ruling dismisses an appeal from the ASIC, which had sought penalties against the company. The agency has now been ordered to cover Block Earner’s legal costs from both the original trial and the appeal.
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Hilariously, ASIC stated in a brief announcement that it is “considering this decision”.
Founders Say they Acted in Good Faith
A win is a win, and with this decision, the court has cleared Block Earner of any wrongdoing under financial services law, officially nullifying earlier findings that the product constituted a regulated investment scheme.
Block Earner was founded by Charlie Karaboga and Jordan Momtazi in 2021. Karaboga stated that the court’s decision on how the founders acted “in good faith”:
From the outset, we sought to ensure that our modern product suite could fit into a less-modern regulatory environment. The court initially found no penalty was warranted, yet ASIC sought to appeal that decision, placing further stress on our company.
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