ASIC Pursues Legal Action Against Unlicensed Crypto Firms in Australia

As per local sources, the Australian Securities and Investment Commission (ASIC) has initiated legal action against two cryptocurrency firms and their directors for operating without proper authorization within the country. Reportedly, these companies were involved in a complex scheme that led to the loss of AU$160 million, equivalent to $104 million, for investors.

The regulatory body in Australia has commenced civil proceedings against entities associated with the NGS Group and their respective directors: Brett Mendham, Ryan Brown, and Mark Ten Caten. The NGS Blockchain companies implicated include NGS Crypto, NGS Digital, and NGS Group.

ASIC alleges that these NGS entities targeted Australian investors by offering blockchain mining packages promising fixed returns. Additionally, the regulator accuses them of promoting the use of self-managed super funds (SMSFs) to invest in cryptocurrencies.

According to the NGS Crypto website, the company was established in 2018 with a focus on blockchain technology, aiming to assist members in generating consistent returns.

In a press release, ASIC stated that these financial services were being provided without the necessary licensing, prompting the regulator to seek "interim and final injunctions against the NGS Companies."

ASIC Chair Joe Longo advised Australian investors to carefully assess the risks associated with managing SMSFs independently before investing in cryptocurrency-related products like those offered by the NGS Group.

Furthermore, ASIC Chair cautioned the crypto industry that ASIC would continue to rigorously scrutinize such products to ensure compliance with regulatory obligations and protect consumers.

ASIC has applied to the Federal Court to appoint liquidators responsible for managing the digital assets of the companies involved, citing concerns about the potential dissipation of investor assets.

On Wednesday, the court approved the request of ASIC and imposed travel restrictions on Mendham. Initial investigations revealed that more than 450 Australian investors collectively invested AU$62 million, approximately $41 million, through the NGS Companies.

Similarly, DCA Capital, Digital Commodity Assets, and the Digital Commodity Assets Fund, which are now facing collapse, owe over AUD$100 million, roughly $64.6 million, to more than 100 investors.

Investigations were launched following complaints from investors regarding the operations of these cryptocurrency funds, reportedly managed by Ash Balanian, a former NASA mission scientist. Subsequently, liquidators were appointed to oversee the affairs of the three companies associated with Balanian.

According to reports, these funds targeted affluent investors, requiring a minimum deposit of AU$50,000. Investors raised concerns about irregularities in fund management, leading to regulatory intervention.

On Wednesday, the Australian Federal Court ordered the freezing of Balanian's assets valued at AU$55 million and mandated that the crypto fund manager surrender his passport.