By Matthew Lo and Mary Tabaco -
Snapshot
- In the latest instalment of ASIC’s Web 3 litigation, the High Court considered whether a crypto asset product was a derivative and therefore a financial product within the meaning of the Corporations Act 2001 (Cth).
- The judgment considered how the Chapter 7 financial services regime applies to emerging crypto asset products and contractual arrangements involving digital assets.
- The matter has been remitted to the Full Federal Court to consider ASIC’s appeal on penalty, including the relevance of reliance on legal advice.
On 17 June 2026, the High Court handed down judgment in the case of ASIC v Web 3 Ventures [2026] HCA 21. This was an appeal from the Full Court of the Federal Court. The High Court upheld the appeal, finding the crypto-asset product known as Earner was a derivative within the meaning of the Corporations Act 2001 (Cth) (‘Act’). However, this does not mean the saga is over. Questions concerning penalty remain unresolved.
The Full Court initially considered an appeal of the first instance decision by Jackman J. His Honour had found Earner was a managed investment scheme (but not a derivative) and therefore Web 3 was required to hold an Australian Financial Service Licence (‘AFSL’). His Honour had, however, found a reduced penalty should be imposed on Web 3 for this breach as it had, inter alia, received and followed legal advice from a ‘leading law firm’. The matter of this penalty reduction was appealed to the Full Court and Web 3 cross-appealed the breach finding. The Full Court overturned Jackman J’s decision, finding Earner was not a financial product at all (neither managed investment scheme nor derivative) and accordingly Web 3 had not committed a breach.
