By and -

Snapshot

  • The Full Court of the Federal Court has unanimously overturned the primary judgment that found Block Earner operated an unregistered managed investment scheme and lacked an Australian Financial Services Licence.
  • The Full Court addressed the original judge’s decision to relieve Block Earner of penalties due to their reliance on legal advice from a ‘leading’ law firm, despite no direct evidence of the advice being presented.
  • ASIC has sought special leave to appeal to the High Court, aiming to clarify the definition of financial products in the context of cryptoassets, as well as the penalty implications of legal advice.

On 22 April 2025, the Full Court of the Federal Court handed down judgment in Australian Securities and Investments Commission v Web3 Ventures Pty Ltd [2025] FCAFC 58 (‘Web3’). This decision concerns an appeal by the  Australian Securities and Investments Commission (‘ASIC’) of a decision at first instance by Jackman J in Australian Securities and Investments Commission v Web3 Ventures Pty Ltd [2024] FCA 64 (‘primary judgment’).

In the primary judgment, the Court found Web3 Ventures Pty Ltd, trading as Block Earner (‘Block Earner’), contravened sections 601ED and 911A of the Corporations Act 2001 (Cth) (‘the Act’) by operating an unregistered managed investment scheme and had carried on a financial services business without an Australian Financial Service Licence (‘AFSL’) (at [85]). Block Earner was operating products, inter alia, called ‘Earner’ and ‘Access’, which allowed customers ‘to lend out their cryptocurrencies holdings and earn interest on their loans’ and to do so ‘without traditional intermediaries such as banks or financial institutions’ (at [14] and [19]). His Honour found Access was not a managed investment scheme (at [73]) but found Earner was, inter alia, a managed investment scheme (at [85]). Consequently, Block Earner was in contravention of the Act by operating an unregistered managed investment scheme in respect of Earner and not holding an AFSL whilst carrying on a financial services business.

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