Australian Regulator Sues Finder.com Over Unlicensed Crypto Product

Financial product comparison website Finder.com is facing legal action from Australia’s financial services regulator, the Australian Securities and Investments Commission (ASIC), for allegedly offering a cryptocurrency yield-bearing product without the necessary licensing. This marks the second instance of a local provider of a crypto yield product being targeted since Block Earner experienced a similar fate in November.

On Dec. 15, ASIC initiated court proceedings against Finder.com’s subsidiary, Finder Wallet, which operates as a registered digital currency exchange in Australia. The commission contends that the Finder Earn product was an unlicensed financial product, violating product disclosure requirements and failing to meet obligations related to the targeted distribution of financial products.

Finder Earn offered users annual yields ranging from 4.01% to 6.01% for depositing True AUD (TAUD), an Australian dollar-pegged stablecoin. ASIC classified the product as a debenture — a type of debt instrument unbacked by collateral — thereby necessitating an Australian Financial Services (AFS) license for its operation.

According to ASIC, Finder Earn presented potential harm to consumers, who may have been offered a product unsuitable for their circumstances. In response, a spokesperson for Finder.com stated, “We do not share ASIC’s view that Finder Earn can be regarded as a debenture,” adding, “Since Finder Earn was launched in November 2021, we have proactively engaged with ASIC and have cooperated fully with all ASIC requests for information.”

The crypto yield product was voluntarily “sunset” on Nov. 24, which ASIC attributed to earlier notifications of its concerns regarding regulatory compliance. A spokesperson for Finder asserted that the decision to discontinue Finder Earn was based on strategic business considerations related to rising interest rates, and was not a direct result of regulatory scrutiny. They added, “We were in the process of this sunset when we were notified [ASIC] might take a closer look.”

Both ASIC and Finder.com confirmed that all user funds were fully returned following the closure of Finder Earn. The spokesperson stated that the company would refrain from further comments as the matter is now being addressed in court.

ASIC’s deputy chair, Sarah Court, conveyed a clear message to the industry, stating, “Just because an offer involves a crypto-asset related product does not guarantee it will fall outside the current regulatory regime.” This legal action against Finder.com demonstrates ASIC’s ongoing commitment to regulating the crypto space after targeting multiple firms over alleged breaches of financial product regulations.

Previously, in November, ASIC sued fintech firm Block Earner for offering three crypto-backed fixed-yield earning products without an AFS license. The CEO of Block Earner criticized the regulatory environment, citing a “lack of clarity” in Australia’s financial licensing regime. Furthermore, in October, financial services firm BPS Financial was also sued by ASIC for unlicensed conduct related to its Qoin token, with claims of misleading representations regarding regulatory compliance in Australia.

ASIC chair Joe Longo had previously warned that regulatory action would be forthcoming for firms promoting high-risk and niche crypto investment products, indicating a tougher stance against non-compliant entities in the industry.