Unlicensed blockchain mining firms in Australia busted by regulators

Australian investors are facing a significant loss of over 160 million Australian dollars ($104 million) as three cryptocurrency mining companies, namely NGS Crypto Pty Ltd, NGS Digital Pty Ltd, and NGS Group Ltd (collectively referred to as “NGS companies”), have gone into liquidation.
According to a report dated April 12, the Australian Security and Investments Commission (ASIC) has filed civil proceedings against the companies and their directors, Brett Mendham, Ryan Brown, and Mark Ten Caten.
The NGS companies are accused of targeting local investors to set up self-managed superannuation funds (SMSFs) and then converting the funds into cryptocurrency for investment in blockchain mining packages with promised fixed-rate returns.
ASIC alleges that around 450 investors entrusted a total of 62 million AUD ($40 million) to these companies, which were operating without the necessary Australian license.
The financial watchdog is concerned about the potential dissipation of digital assets invested in blockchain mining and has successfully requested the Federal Court to appoint liquidators specifically for NGS companies’ digital currency holdings. Mendham has also been prohibited from leaving Australia.
Furthermore, ASIC has taken steps to prevent NGS companies from offering financial services in Australia without proper authorization.
ASIC Chair Joe Longo has warned Australians against investing their SMSFs in cryptocurrency and has reaffirmed the commission’s commitment to scrutinizing crypto products to ensure investor protection through regulatory compliance.
Meanwhile, other Australian cryptocurrency entities, including DCA Capital, Digital Commodity Assets Pty Ltd, and the Digital Commodity Assets Fund, are also facing liquidation and federal court proceedings due to concerns from investors regarding mismanagement, lack of proper licenses, and potential breaches of managed investment scheme regulations.
Liquidators appointed by KordaMentha have discovered debts totaling 100 million AUD ($65 million) owed to 100 investors. The federal court has frozen the assets of DCA Capital’s director, Ashod Balanian, amounting to 55 million AUD ($36 million), and he has been instructed to surrender his passport.
Regulators in Australia have been focusing more on the country’s crypto regulatory landscape in recent months. On March 21, ASIC Commissioner Alan Kirkland emphasized the need to address the “regulatory trilemma” for financial innovation, which includes consumer protection, market integrity, and promoting financial innovation.
Australia has been identified as a country that is on the verge of a “crypto demand inflection point.” While there is still a lag in local demand for institutional crypto, the use of stablecoins and favorable policy moves could potentially ignite a movement.