May 19, 2024
Latest Cryptocurrency News

Australian Investors Lose Millions as Blockchain Mining Companies Collapse

Hundreds of Australian investors find themselves collectively over 160 million Australian dollars ($104 million) poorer following the collapse of three cryptocurrency mining companies: NGS Crypto Pty Ltd, NGS Digital Pty Ltd, and NGS Group Ltd.

Allegations and Legal Action

The Australian Security and Investments Commission (ASIC) has taken swift action, initiating civil proceedings against the companies and their directors: Brett Mendham, Ryan Brown, and Mark Ten Caten.

The ASIC accuses the NGS companies of enticing local investors to establish self-managed superannuation funds (SMSFs) before converting these funds into cryptocurrency for investment in blockchain mining packages, promising fixed-rate returns.

Investor Concerns and Regulatory Response

Approximately 450 investors entrusted a total of 62 million AUD ($40 million) to these companies, which operated without the necessary Australian license. Amid fears of dissipation of digital assets, the ASIC has secured court-appointed liquidators specifically for the NGS companies’ digital currency holdings.

Brett Mendham has been barred from leaving Australia, and ASIC has moved to prevent NGS companies from offering financial services in the country without proper authorization.

ASIC Chair Joe Longo has cautioned against SMSF investment in cryptocurrency, emphasizing the commission’s commitment to scrutinizing crypto products for regulatory compliance and investor protection.

Wider Regulatory Landscape

This incident adds to concerns over Australia’s crypto regulatory environment. Fellow cryptocurrency entities, including DCA Capital and Digital Commodity Assets Pty Ltd, also face liquidation and federal court proceedings due to investor concerns about mismanagement and regulatory compliance.

Regulators are increasingly focusing on the crypto landscape. ASIC Commissioner Alan Kirkland highlighted the need to address the “regulatory trilemma” for financial innovation, balancing consumer protection, market integrity, and encouraging financial innovation.

Australia, viewed as approaching an “inflection point” of crypto demand, may see shifts in institutional crypto adoption due to stablecoins and favorable policy moves. However, regulatory scrutiny remains essential for maintaining market integrity and investor confidence.

Image by freepik

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