An Australian federal court recently dismissed a lawsuit filed by the country’s corporate regulator against a sister company of Australian fintech firm Finder.com. The court found that Finder Earn, a yield-bearing product offered by Finder Wallet, was compliant with financial laws.

Justice Brigitte Markovic ruled on March 14 that the Australian Securities and Investments Commission (ASIC) failed to establish that the Finder Earn product is a debenture under the Corporations Act. A debenture is a debt security where companies promise to pay back borrowed money with interest. As a result, the court ordered the dismissal of the case with costs.

In December 2022, ASIC sued Finder Wallet, alleging that the Finder Earn product was an unlicensed financial product and required the exchange to hold a financial services license. However, Finder had already discontinued the product a month earlier. While ASIC claimed this was due to regulatory concerns, Finder stated it was a strategic business decision prompted by increased interest rates.

A Finder spokesperson described the court’s decision as a “landmark win.” When asked about the possibility of relaunching the Earn product, the spokesperson mentioned that there are no current plans to do so. The closure of the product was attributed to market conditions rather than regulatory actions.

Finder Global CEO and co-founder Frank Restuccia expressed satisfaction with the outcome, emphasizing the company’s commitment to regulatory compliance. He stated that Finder engaged openly and proactively with ASIC throughout the process.

In response to the court ruling, ASIC’s executive director of enforcement and compliance, Tim Mullaly, mentioned that the regulator pursued the case to ensure consumer protection. ASIC is now reviewing the judgment and has the option to lodge an appeal within 28 days.

This development follows ASIC’s recent legal action against another crypto platform, Block Earner, which resulted in penalties for its yield-bearing product. The court ruled that Block Earner needed a financial services license for its offerings.

Overall, the court’s decision in the Finder Wallet case highlights the importance of regulatory compliance in the cryptocurrency and fintech sectors.

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