Block Earner Faces Legal Action for Unlicensed Crypto Lending in Australia

The Federal Court of Australia has ruled against Block Earner, also known as Web3 Ventures Pty Ltd, for offering its ‘Earner’ cryptocurrency lending product without obtaining the required Australian Financial Services License. However, the court allowed the company to continue offering its ‘Access’ product, which involved wrapping DeFi yields from platforms like AAVE and Compound, as the regulatory body failed to adequately prove its case.

The Earner product, shut down in November 2022, facilitated straightforward crypto lending, directing user deposits to third-party firms for earning yields. Notably, Block Earner lent to firms like Stablehouse, advised by Tether’s former chief strategy officer Phil Potter, and XBTO Strategies Limited.

In contrast, the Access product focused on deploying funds directly into DeFi platforms and was deemed not to meet the requirements for classification as a derivative or a managed investment scheme. Block Earner sees this legal case as providing guidance for other crypto businesses navigating Australia’s financial services regulatory landscape.

Australian regulators have been actively pursuing legal action against cryptocurrency lenders in the country, including Finder Wallet, which operated similarly by accepting deposits and lending them to third parties for yield generation.