The 7-0 ruling of the Full Bench ends four years of legal action and appeals, overturning last year’s decision by Full Federal Court, which previously found in favour of Web3 Ventures, the company behind the crypto platform.
The wrangling involved a now defunct fixed-yield, digital asset-related product called Earner, offered between March to November 2022. ASIC believed the digital currency exchange needed an Australian financial services licence (ASFL) to offer it, and launched legal action in 2023, after Block Earner had already shut down Earner.
Ironically, ASIC subsequently granted Sydney fintech an Australian Credit Licence (ACL) last month – before the High Court decision was handed down – making it the first Australian crypto platform licensed to directly offer regulated lending products under its own credit licence.
The Federal Court initially sided with ASIC in 2024 in its stoush over Earner. Then an appeal to the Full Federal Court overturned that decision. So ASIC had another crack in May 2025, seeking special leave to appeal to the High Court which was granted last year, with the case heard in March.
The High Court justices accepted ASIC’s argument that Earner was a derivative as the amount returned to investors varied by reference to the value of the digital asset and exchange rates.
The Court ruled it was sufficient that investors’ funds were used or intended to be used to generate a return for both the investor and the issuer, noting “any contention otherwise would ignore the commercial reality of any such financial investment.”
The win means ASIC now has clear guidance that when crypto products promise a return fall within the existing financial services regulatory regime.
“This reinforces ASIC’s long-standing position that the definition of financial product is broad and technology neutral and so captures new and emerging products without the need to amend the legislation,” ASIC chair Sarah Court said.
“Firms offering products that provide a return to consumers or involve the conversion of assets must carefully consider whether their offerings are financial products, and if so, ensure they are appropriately licensed or authorised before distributing them.”
Block Earner cofounder and CEO Charlie Karaboga said in the wake of the ruling that his company’s view is that legal clarity for Australia’s digital asset sector should come through legislative reform, not retrospective litigation.
It’s a view no doubt shared by the Finder crew, who had a similar tussle with ASIC – who decided to litigate the matter after the startup went to the regulator seeking advice.
Karaboga, whose company has incurred considerable legal fees – most recently with the High Court ruling that both sides have to pick up the respective tabs for their cross-appeals (although the court did rule that ASIC pay Block’s costs in its successful appeal) – said they’ll continue to engage constructively with ASIC.
“It is unfortunate that such significant questions about the application of financial services law to digital assets have had to be tested through enforcement against a small, innovative Australian startup,” he said.
“We’re excited about the future and remain committed to ongoing regulatory engagement and to contributing to the development of fair, forward-looking financial services laws in Australia.”
It’s not the end for either side when it comes to lawyering up though – one sticking point remains: a June 2024 Federal Court ruling that relieved Block Earner from liability for a penalty over Earner, which ASIC subsequently appealed.
The matter now returns to the Full Federal Court for ASIC’s appeal against the penalty judgment.
