ASIC Cautions Investors Against $41M Crypto Investment Scheme
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A large cryptocurrency investment scheme in Australia involving $41 million and more than 450 investors has collapsed.
The collapse is being investigated by the Australian Securities and Investments Commission (ASIC). The financial market regulator has secured a court order to select receivers for the crypto assets held by three crypto mining companies.
The companies whose digital currency assets the ASIC wants to hold ownership over are collectively known as NGS Companies and the sole directors.
A $41 Million Investment Scheme
The court order obtained by the ASIC was granted on Wednesday. The court order was part of the civil proceedings commenced by the ASIC against NGS Crypto Pty Ltd, NGS Digital Pty Ltd, and NGS Group Ltd.
The court order also mentions the sole directors of the company including Brett Mendham, Ryan Brown, and Mark Ten Caten. As part of the court order, Mendham has also been barred from traveling outside Australia.
NGS Companies are implicated in this scheme. These companies provided investment packages supported by their activities in cryptocurrency mining activities. Investors who purchased these packages were promised fixed rate returns of 16% annually. The platform also promised investors a minimum fixed return of 6%.
The ASIC announced that the investment scheme offered by the companies solicited funds from investors. The regulator said investors were urged to move funds from regulated superannuation funds to self-managed super funds (SMSFs). The funds were later converted into cryptocurrencies.
The company’s website also provided different promotional materials to lure investors into investing in the schemes. The materials included testimonials and stories, which largely appeared to target elderly investors.
Concerns over the Safety of Investment Schemes
The actions taken by the ASIC to obtain a court order against the company come amid concerns that the funds invested in the cryptocurrency schemes were at risk of being misused.
The ASIC said that none of the companies involved in this scheme possessed the needed license to provide financial services in Australia. The regulator is saying that these companies are now accountable for marketing investment products backed by crypto mining activities.
The chair of the ASIC, Joe Longo, opined that Australians who wanted to self-manage their superannuation needed to consider the risks before transferring their funds into investment products linked to cryptocurrencies like blockchain mining.
“These proceedings should also serve as a warning to the crypto industry that ASIC will continue to scrutinize products to ensure compliance with regulatory obligations and to protect consumers,” Longo said.
Earlier this year, the ASIC announced that it had gotten rid of similar crypto-related schemes. The regulator has been cautioning investors against schemes that promise high returns with no relevant experience in the industry.
