Hundreds of Australian investors have lost over 160 million Australian dollars ($104 million) following the collapse of three cryptocurrency mining companies, NGS Crypto Pty Ltd, NGS Digital Pty Ltd, and NGS Group Ltd (collectively known as the “NGS companies”).
This financial debacle unfolded as these entities entered into liquidation.
The Australian Security and Investments Commission (ASIC) has initiated civil proceedings against the NGS companies and their directors, Brett Mendham, Ryan Brown, and Mark Ten Caten.
These companies are alleged to have enticed local investors to set up self-managed superannuation funds (SMSFs), which were then converted into cryptocurrency investments in blockchain mining packages promising fixed-rate returns.
ASIC claims that around 450 investors had invested approximately 62 million AUD ($40 million) with these companies, which lacked the requisite Australian financial services license.
The commission’s concerns over the possible loss of digital assets led to the Federal Court’s decision to appoint liquidators for handling the NGS companies’ digital currency holdings.
Additionally, Brett Mendham has been prohibited from leaving Australia.
The regulator has also taken steps to prevent the NGS companies from offering financial services in the country without the necessary authorization.
ASIC Chair Joe Longo emphasized the risks of investing SMSFs in cryptocurrency and affirmed the agency’s dedication to regulating crypto products to safeguard investors.
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In a related development, other Australian cryptocurrency entities such as DCA Capital, Digital Commodity Assets Pty Ltd, and the Digital Commodity Assets Fund are undergoing liquidation and face federal court proceedings due to concerns about mismanagement and regulatory non-compliance.
KordaMentha, the liquidator for these companies, has identified debts totaling 100 million AUD ($65 million) owed to 100 investors.
Furthermore, the federal court has frozen assets of DCA Capital’s director, Ashod Balanian, valued at 55 million AUD ($36 million), and he has been ordered to surrender his passport.
The increased scrutiny from ASIC in recent months reflects a broader regulatory focus.
On March 21, ASIC Commissioner Alan Kirkland pointed out the need to address the “regulatory trilemma” which includes balancing consumer protection, market integrity, and the promotion of financial innovation.
As Australia approaches a significant “inflection point” in cryptocurrency demand, the market continues to evolve.
Although local institutional demand remains subdued, the potential for growth in stablecoins and favorable policy adjustments suggest a burgeoning interest in crypto within the nation.
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