By
Tolu Ajiboye
April 10th, 2024
ASIC will continue investigating the companies and their executives until the case is finalized.
The Australian Security and Investments Commission (ASIC) has busted three companies involved in illegal crypto mining operations in the country.
According to a Friday report, the authorities acted after receiving complaints from investors that the companies NGS Crypto Pty Ltd, NGS Digital Pty Ltd, and NGS Group Ltd may be operating an illegal scheme.
The ASIC opened investigations into the blockchain mining firms collectively known as “NGS companies”, and it found that around 450 Australians invested approximately 62 million Australian dollars in the firms, which are estimated to be valued at $40 million.
Civil Proceedings
Investors’ concerns about mismanagement, lack of proper licenses, and potential violations of managed investment scheme regulations prompted the investigation.
The probe later led to civil proceedings against the companies and their directors, including Brett Mendham, Ryan Brown and Mark Ten Caten.
In the proceedings, the Aussie authorities said the NGS violated the country’s section 911A of the Corporations Act by providing financial services without an Australian financial services license.
The regulator is now seeking interim and final injunctions against the firms to prevent them from offering financial services in the region.
The financial watchdog claimed the NGS companies and their executives targeted local investors, persuading them to establish self-managed superannuation funds (SMSFs) and then converting them into cryptocurrencies for investment in blockchain mining packages that promised fixed-rate returns.
Court Grants ASIC’s Petition
The regulator, concerned about the potential dissipation of the digital assets invested in the NGS companies, petitioned the Federal Court to appoint liquidators to safeguard the victim’s funds.
In a Friday announcement, ASIC said the court granted its petition on April 10, 2024, and appointed Anthony Connelly, Kathy Sozou and Jamie Harris of McGrathNicol as recipients of the cryptocurrencies. The financial watchdog said the move was intended to protect the millions of dollars the company exploited from investors.
The appointees will also be responsible for holding Mendham, Ten Caten, and Brown’s personal assets. Additionally, the court has banned Mendham from leaving Australia.
ASIC Chair Joe Longo has cautioned Australians against investing their SMSFs in digital assets.
“Australians who decide to self-manage their super should consider the risks before using their SMSF to invest in crypto-related investment products such as blockchain mining,” Longo said.
He further stated that the ongoing proceedings should serve as a warning to the digital assets sector, noting that ASIC is committed to scrutinizing crypto products in Australia to ensure they comply with local regulations and protect investors.
Meanwhile, ASIC will continue investigating the companies and their executives until the case is finalized.