In Australia, a substantial cryptocurrency investment scheme, which had attracted over 450 investors and involved approximately US$41 million, has recently failed.
The Australian Securities and Investments Commission (ASIC) successfully pursued a court order to appoint receivers for the digital assets of three associated crypto mining companies, known collectively as NGS Companies, and their sole directors.
The court order was issued as a part of the civil proceedings against NGS Crypto Pty Ltd, NGS Digital Pty Ltd, and NGS Group Ltd, as well as their directors Brett Mendham, Ryan Brown, and Mark Ten Caten.
This legal action was taken on Wednesday and includes a travel restriction on Mendham, preventing him from leaving Australia.
NGS Companies offered investment opportunities linked to their cryptocurrency mining operations, promoting fixed-rate returns as high as 16 percent per year, with a guaranteed minimum return of 6 percent as advertised on their website.
The ASIC emphasized that these investment schemes encouraged participants, particularly targeting elderly investors, to shift funds from regulated superannuation accounts to self-managed super funds (SMSFs), which were then invested in cryptocurrencies.
The company’s promotional materials, including testimonials and success stories, were specifically designed to attract this demographic.
The intervention by ASIC was driven by concerns over the potential mismanagement of the invested funds in these schemes.
Crucially, none of the implicated firms had the necessary financial services licenses required for lawful operation within Australia, prompting regulatory actions for illegally promoting crypto mining-backed investment products.
Joe Longo, Chair of ASIC, issued a caution regarding the risks associated with using SMSFs for crypto-related investments.
He stated, “Australians who choose to self-manage their superannuation should carefully consider the risks before using their SMSF to invest in crypto-related investment products such as blockchain mining.”
Longo further warned that this case should alert the crypto industry to the continued scrutiny by ASIC to ensure compliance with regulatory standards and consumer protection.
This action follows earlier efforts by ASIC this year to dismantle similar schemes that promised high returns and resulted in the banning of a director from a crypto fund due to dishonest practices.