Australian Court Transfers $41 Million in Crypto from Blockchain Mining Group at Regulator’s Behest

Australia’s financial regulator initiated legal action against the NGS consortium of blockchain mining firms. Approximately $41 million worth of digital assets, invested by more than 450 Australians, has been transferred to restructuring experts.

The Australian Securities and Investment Commission (ASIC) alleges that the companies violated regulations by offering financial services without the necessary licenses. Responding to a petition from ASIC, an Australian Federal Court approved the transfer of around $41 million in digital assets, invested by over 450 Australians in the NGS consortium of blockchain mining firms, to three specialists from McGrathNicol, an independent advisory and restructuring firm.

ASIC commenced civil proceedings against NGS Crypto, NGS Digital, and NGS Group, along with their respective directors Brett Mendham, Ryan Brown, and Mark Ten Caten. Mendham has also been prohibited from leaving Australia. The court order follows ASIC’s allegations of the companies’ non-compliance with Australian regulations regarding financial services, including operating without the necessary licenses.

“ASIC contends that the NGS companies targeted Australian investors, offering blockchain mining packages with fixed returns, and encouraged them to utilize funds transferred from regulated super funds to self-managed super funds (SMSFs), which were then converted into cryptocurrency,” stated the regulator. The involvement of a restructuring firm does not imply that the companies have collapsed. ASIC expressed concerns about the potential dissipation of funds and deemed appointing a receiver as the most appropriate measure to safeguard the assets.

Although ASIC is still investigating, it has not sought a complete ban on the companies but has instead pursued interim and final injunctions to prohibit their operations without a license. The NGS companies have yet to respond to a request for comment from CoinDesk.