Finder Wallet, the cryptocurrency offshoot of Finder, has been sued by the Australian Securities and Investments Commission (ASIC) for its Earn product which offered customers a way to earn yield on their cryptocurrency.
They allege that the Australian financial services comparison firm was providing illegal financial advice and was offering Finder Earn without the appropriate licensure.
“Our message to [the crypto] industry is clear: just because an offer involves a crypto-asset related product does not guarantee it will fall outside the current regulatory regime,” said ASIC deputy chair Sarah Court.
Finder was founded by Fred Schebesta and Frank Restuccia. Schebesta stepped down as co-CEO of Finder several days ago, after it received a warning from regulators about its Earn product in late November.
“Issuers of financial products such as debentures must issue appropriate risk disclosure documents and develop appropriate target market determinations to ensure that consumers are not sold inappropriate products,” Court said.
“We allege that Finder Wallet failed to do this, potentially putting their customers at risk of harm.”
However, Finder has previously argued it doesn’t need a license to offer this type of product. Restuccia told Australian media outlet Smart Company that ASIC’s characterization of the product is inaccurate. The CEO said Finder was “always on the front foot” when it came to legal standards.
Schebesta and Restuccia previously worked together on HiveEx, a cryptocurrency over-the-counter (OTC) trading desk, which was sold to Alameda Research for $300,000 Australian Dollars and used to provide banking access for FTX.