Australian Investors Face $104 Million Loss in Unlicensed Crypto Companies

Key Points

  • The Australian Securities and Investment Commission has initiated civil actions against NGS Group for running unlicensed crypto operations.
  • Over 450 Australian investors are implicated, with NGS Group mismanaging around AU$62 million in blockchain mining investments.
  • Simultaneously, the DCA Capital and related entities face scrutiny for owing AU$100 million due to operational irregularities.
Australian Investors Face $104 Million Loss in Unlicensed Crypto Companies
Australian Investors Face $104 Million Loss in Unlicensed Crypto Companies

The Australian Securities and Investment Commission (ASIC) has recently taken two crypto companies and their directors to court for operating without a proper license, endangering millions in investor funds. The firms, NGS Crypto and NGS Digital, and their parent company, NGS Group, along with another entity, DCA Capital, have allegedly defrauded investors of approximately AU$ 160 million (about $104 million).

ASIC’s allegations state that NGS Group attracted Australian investors to purchase blockchain mining packages promising fixed returns. The directors, Brett Mendham, Ryan Brown, and Mark Ten Caten, reportedly urged investors to funnel their self-managed superannuation funds (SMSFs) into these crypto ventures.

Moreover, the regulatory body accuses these firms of operating financial services without the necessary accreditation, prompting ASIC to seek both interim and final injunctions to halt their activities. Joe Longo, ASIC Chair, has stressed the importance of understanding the risks associated with SMSFs when considering crypto investments. “These proceedings should send a clear message to the crypto industry about our resolve to ensure compliance,” Longo stated, emphasizing the protective measures for consumers.

Following these allegations, the Federal Court responded by appointing liquidators for the involved companies and restricting Mendham from leaving Australia. This decision came after it was revealed that over 450 locals had invested roughly AU$62 million with NGS Group.

In a related crackdown, ASIC also focused on DCA Capital, which was managed by Ash Balanian, an alleged former NASA mission scientist. After investors reported mismanagement, investigations uncovered that over 100 individuals are owed more than AU$ 100 million. These findings led to the freezing of Balanian’s assets and an order to surrender his passport.

These rigorous actions by ASIC highlight the growing scrutiny on the crypto sector, particularly focusing on the compliance of crypto products with existing financial regulations to safeguard investor interests. As these legal battles unfold, they underline the imperative for all crypto entities to operate within the regulatory frameworks established to protect consumers from potential scams and financial losses.

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Raymond Munene