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Australian Regulator to Take Legal Action Against Illegal Crypto Mining Companies

Australian regulators have launched civil proceedings against two local firms namely NGS and DCA Capital after their demise. This sudden crash left the investors of the fund in outstanding payables valued at $160 million.

The unfortunate event affected the lives of hundreds of Australian nationals who had purchased around $104 million in investments on these platforms.

Legal Action Against NGS Companies

The NGS Crypto, NGS Digital, and NGS Group which are collectively called NGS companies were driven to liquidation. The report issued on 12th April 2024 by the Australian Security and Investments Commission (ASIC) has launched civil proceedings against these firms and their appointed directors namely Brett Mendham, Ryan Brown, and Mark Ten Caten.

NGS companies are also purported to have targeted local investors for self-managed superannuation funds (SMSFs).

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The accusation proceeds to notice that the funds from lured investors were to be driven into cryptocurrencies for investments in blockchain mining projects with a promise of fixed-rate returns.

The ASIC has also alleged that around 450 investors put a total of 62 million AUD or $40 million in the liquidated firms. Furthermore, these firms were operating without the necessary Australian license.

Potential Risks Associated with Blockchain Mining

The regulatory agency also raised concerns about the potential issues created by digital asset investments in the blockchain mining sector. The federal court will appoint liquidators of digital currency reserves of NGS firms.

Mendham is also barred from leaving Australia until further notice. Furthermore, ASIC has taken action to prevent NGS firms from extending financial services in Australia without acquiring a license.

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ASIC chairperson Joe Longo has warned Australians from investing in SMSFs pertaining to cryptocurrencies and reiterated that the commission will scrutinize crypto-based products and services to make sure that investors have a regulatory shield against potential threats.

On the other hand, Australian crypto entities namely DCA Capital, Digital Commodity Assets Fund, and Digital Commodity Assets are also looking at liquidations in the aftermath of federal court lawsuits.

At the same time, investors have raised concerns about mismanagement, lack of certification, and potential breach of management schemes which has prompted this decision from the regulators. Korda Mentha is one of the court-appointed liquidators who discovered a total of 100 million AUD or $65 million that are indebted to 100 investors.   

Federal Court of Australia Freezes Assets of DCA Capital Director

The federal court of Australia has seized the assets of DCA Capital director Ashod Balanian valued in 55 million UAD or $36 million. At the same time, he was instructed to hand over his passport to the authorities.

Australian regulators have more attention to the crypto regulatory landscape during the last few months. On 21st March, ASIC Commissioner Alam Kirkland told the media about the urgency of solving regulatory trilemma to preserve financial innovation.

The commissioner put an emphasis on assuring customer protection, salvaging market integrity, and encouraging new solutions in fintech. Australia was recently flagged as a nation that is undergoing radical changes in terms of its policies regarding the cryptocurrency sector.

The local crypto industry has demanded that institutional preservation of cryptocurrency projects is still under development. However, a positive stance towards stablecoins and policy changes are required to spark a tactical advantage to the local crypto sector.

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Another report published in Cointelegraph regarding the latest developments in Australia has shared findings about a survey about crypto preferences. The survey was conducted by the Reserve Bank of Australia (RBA) on the perception and choices of Australian investors towards Central Bank Digital Currency or CBDC. The participants of the survey were asked to pay for CBDC usage in digital wallets and the privacy features of CBDCs.

The survey noticed that the investors who are willing to pay 5 AUD per year can generate around 100 million AUD in fees which is not an overwhelming amount to make the case for issuing CBDCs.

The security of CBDCs stems from the lack of credit risk that is intrinsic to TradeFi deposits due to the risk of runs. For 2022, RBA demonstrated that Australian investors picked commercial bank deposits over RBA accounts due to less than one AUD fee per year for abstaining.


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Hassan Mehmood (Saudi Arabia)

Hassan is currently working as a news reporter for Tokenhell. He is a professional content writer with 2 years of experience. He has a degree in journalism.

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