On December 18, 2025, Australia’s Federal Court delivered a significant blow to the cryptocurrency investment landscape by ordering the winding up of NGS Group Limited, NGS Crypto Pty Ltd, and an unregistered managed investment scheme operated by these entities. This landmark decision stems from findings that the companies operated a financial services business without holding an Australian Financial Services (AFS) licence, in direct contravention of the Corporations Act.
The ruling permanently restrains NGS Group, NGS Crypto, and NGS Digital from conducting financial services in Australia and appoints liquidators to oversee the dissolution process. With over 450 Australian investors affected—many having poured retirement savings into the scheme totaling approximately $59 million AUD—this case highlights ongoing risks in the unregulated corners of the crypto market.
In this in-depth blog post, we’ll explore the background of the NGS companies, the details of their blockchain mining scheme, the timeline of ASIC’s investigation, key court findings, implications for affected investors, and broader lessons for cryptocurrency regulation in Australia in 2025.
What Were NGS Crypto and NGS Group? Understanding the Blockchain Mining Scheme
NGS Crypto Pty Ltd, NGS Digital Pty Ltd, and Hong Kong-domiciled NGS Group Ltd (collectively known as the NGS Companies) positioned themselves as providers of “blockchain mining” investment products. These packages promised investors fixed-rate returns—ranging from 6% to 16% per annum—over terms of 2, 3, or 5 years, backed by cryptocurrency mining operations.
The scheme encouraged Australian investors to transfer funds from regulated superannuation accounts into self-managed superannuation funds (SMSFs), then convert those funds into cryptocurrency for investment in NGS’s mining products
From around 2019 to 2024, the companies attracted over 450 investors, amassing about $59 million AUD. Promotional materials emphasized “guaranteed” returns from mining activities, but ASIC alleged this structure constituted an unregistered managed investment scheme (MIS) requiring registration under the Corporations Act.
Timeline of ASIC’s Investigation and Legal Action
The case against NGS began escalating in early 2024:
- April 2024: ASIC commenced civil proceedings and obtained Federal Court orders appointing receivers (from McGrathNicol) over digital assets worth approximately $41 million USD belonging to the companies and directors Brett Mendham, Ryan Brown, and Mark Ten Caten. A travel restraint was also imposed on Mendham to prevent asset dissipation.
- July-August 2024: Applications to discharge asset preservation orders were refused, and NGS Digital Pty Ltd entered liquidation.
- September 2024: Consent orders granted interim injunctions restraining the companies from further financial services activities.
- November 2024: ASIC amended claims to seek full winding up orders.
- July 2025: A scheduled final hearing was vacated as the companies did not oppose key declarations and injunctions; judgment was reserved on written submissions.
- December 18, 2025: In Australian Securities and Investments Commission v NGS Crypto Pty Ltd (No 5) [2025] FCA 1611, Acting Chief Justice Collier ruled in favor of winding up, citing blatant contraventions and lack of confidence in management.
Key Court Findings: “Blatant Contravention” and Loss of Confidence
The Court’s decision was scathing:
- The NGS companies operated and promoted an unregistered managed investment scheme in “blatant contravention of the Corporations Act.”
- Investors were harmed by the absence of an AFS licence, leading to a “wholly justifiable lack of confidence” in NGS Group’s conduct.
- Regarding NGS Crypto specifically, the controller “did not rectify the fatal flaws” after ASIC raised concerns, prompting the judge to state: “I have no confidence in the conduct and management of NGS Crypto in respect of its affairs.”
The Court emphasized that liquidation offers the “best chance” for members to recover some funds through an orderly process.
Impact on Investors: $59 Million at Stake and Recovery Prospects
Over six years, more than 450 Australians—many retirees—invested via SMSFs encouraged by NGS. The promised fixed returns on volatile crypto mining proved unsustainable without proper licensing and oversight.
With receivers already securing assets since 2024, liquidators will now distribute any recoverable funds. However, full recovery is uncertain due to crypto volatility and potential prior dissipation. Investors should contact McGrathNicol receivers for updates.
Why Fixed Returns on Crypto Mining Triggered Regulation
Under Australian law, offering pooled investments with promised returns classifies as a managed investment scheme requiring registration and an AFSL if provided to retail clients. Fixed-rate guarantees on inherently risky crypto mining transformed what might have been a simple service into a regulated financial product.
Targeting SMSFs added vulnerability, as these allow greater investment flexibility but lack the protections of larger super funds.
Broader Implications for Crypto Regulation in Australia 2025
This case reinforces ASIC’s aggressive stance on unlicensed crypto activities amid growing digital asset adoption. In 2025, with ongoing consultations on crypto licensing frameworks, it signals that promising returns without compliance won’t be tolerated.
Similar enforcement actions against other platforms underscore the need for clearer rules, potentially accelerating proposed custody and platform licensing reforms.
Conclusion: A Step Toward Greater Accountability in Australian Crypto
The winding up of NGS Crypto and NGS Group marks a pivotal moment for investor protection in Australia’s cryptocurrency sector. While it brings hope for partial recoveries, it serves as a stark reminder of the dangers in unlicensed schemes.
As the industry matures, cases like this push for stronger regulation and education. Affected investors: stay informed via ASIC updates and receiver reports. For everyone else, prioritize due diligence in this high-risk space.
Disclaimer: This article is reposted content and reflects the opinions of the original author. This content is for educational and reference purposes only and does not constitute any investment advice. Digital asset investments carry high risk. Please evaluate carefully and assume full responsibility for your own decisions.
