Reportedly, the Australian Securities and Investments Commission (ASIC) has initiated legal action against two cryptocurrency companies and their directors for operating without licenses in Australia. These companies are accused of being involved in a complex scheme that led to investors losing AU$160 million, equivalent to $104 million.
ASIC claims that the NGS companies targeted
Australian investors, offering blockchain mining packages with fixed-rate returns. The regulator also alleges that these companies encouraged investors to use self-managed super funds (SMSFs) and convert the funds into cryptocurrency.
NGS Crypto, as per its website, was established in 2018 as a blockchain company and is part of the NGS Group, aiming to assist members in generating consistent returns.
In its press release, the Australian regulator asserts that these financial services are being provided without the necessary licensing. Consequently, ASIC is seeking interim and final injunctions against the NGS companies.
ASIC Chair Joe Longo advised Australian investors to carefully assess the risks associated with managing self-managed super funds (SMSFs) before investing in cryptocurrency-related products, such as those offered by the NGS Group.
Furthermore, Longo cautioned the crypto industry about ASIC's commitment to scrutinizing crypto products:
These legal actions should serve as a reminder to the crypto industry that ASIC will continue to examine products to ensure compliance with regulatory obligations, aiming to safeguard consumers.
The Australian regulator sought approval from the Federal Court to appoint liquidators to manage the digital assets of the companies, expressing concerns about the potential dissipation of investors' assets.
On Wednesday, the court granted the request and imposed travel restrictions on Mendham. Initial investigations indicated that more than 450 Australians invested AU$62 million, roughly equivalent to $41 million, through the NGS Companies.
Similarly, more than 100 investors are owed over AUD$100 million, approximately $64.6 million, by the collapsing entities DCA Capital, Digital Commodity Assets, and the Digital Commodity Assets Fund.
Investigations commenced recently following complaints from investors regarding the crypto funds operated by Ash Balanian, purportedly a former NASA mission scientist. Subsequently, liquidators were appointed to oversee the three companies managed by Balanian.
According to reports, the fund targeted affluent investors, requiring a minimum deposit of AU$50,000. Investors uncovered irregularities in the fund's management, prompting intervention by authorities.
Numerous investors expressed concerns, noting that the funds lacked the necessary licenses and violated managed investment scheme requirements.
On Wednesday, the Australian Federal Court ordered the freezing of Balanian's assets valued at AU$55 million and directed the crypto fund manager to surrender his passport.
April 2024, Cryptoniteuae