The Australian Securities and Investments Commission (ASIC) has taken steps to appeal its recent court defeat against Finder Wallet, a subsidiary of Australian fintech company Finder.com. The case revolves around Finder Wallet’s “Earn” product, which a federal court ruled compliant with Australia’s financial laws last month.
ASIC had previously argued that Finder Wallet’s yield-bearing product operated without the necessary licence or authorization. However, Federal Court Judge Brigitte Markovic dismissed the case on March 14, stating that ASIC failed to establish Finder Wallet’s Earn product as a “debenture” under the Corporations Act—a type of debt security where companies pledge to repay borrowed money with interest.
In its filing on April 10, ASIC contended that Markovic’s ruling was erroneous because there was no deposit or loan to Finder Wallet when investors used the Earn product. Additionally, ASIC argued that Finder Wallet did not commit to repaying money as a debt.
ASIC had alleged that the Finder Earn product was a debenture. The Federal Court disagreed and dismissed ASIC’s proceedings on 14 March 2024 – ASIC has appealed this decision because it concerned that the Finder Earn product was offered without the appropriate licence or…
— Tom Richardson. (@tommyr345) April 10, 2024
ASIC expressed concerns about consumer protections, stating that it appealed the decision because it believes the Finder Earn product was offered without the necessary licence or authorization.
The appeal will be heard by the Full Federal Court. This court handles appeals from the Federal Court on matters deemed of “sufficient importance” and is the second highest court in Australia after the High Court.
A spokesperson from Finder expressed disappointment with ASIC’s decision not to accept the Federal Court ruling but asserted the company’s readiness to defend its product in the Full Federal Court.
The Finder Earn product, offered from February to November 2022, allowed users to convert Australian dollars into TrueAUD (TAUD)—a stablecoin pegged to the Australian dollar. Users could then transfer TAUD to Finder Wallet in exchange for a yield ranging from 4-6%.
ASIC filed the lawsuit against Finder Wallet in December 2022, alleging that it was an unlicensed financial product. ASIC also claimed that Finder Wallet discontinued the product a month earlier after being notified of ASIC’s concerns. However, a Finder spokesperson clarified that the decision was a strategic business move due to increased interest rates, not prompted by regulatory review.
Despite the court victory, Finder stated last month that it has no plans to relaunch the Finder Earn product.