450 Aussies Burned in $59M Crypto Scam as Regulators Step In
Australia's Federal Court has issued a permanent injunction against blockchain mining firms NGS Group Limited, NGS Crypto Pty Ltd...
Quick overview
- Australia's Federal Court has permanently banned NGS Group and its affiliates from operating financial services without a license.
- The companies ran an unregistered investment scheme, leading to significant losses for over 450 investors who contributed around $59 million.
- Receivers have been appointed to manage the digital assets and ensure a fair liquidation process for investors.
- This case highlights the importance of regulatory compliance in the Australian crypto sector.
Australia’s Federal Court has issued a permanent injunction against blockchain mining firms NGS Group Limited, NGS Crypto Pty Ltd, and NGS Digital Pty Ltd from running any financial services business without a proper licence. Between 2018 & 2024, over 450 Aussies stumped up about $59 million to invest in NGS Group, and many used their own superannuation funds – with NGS Crypto actively encouraging people to do so.
The Court made it clear that the companies had been running an unregistered managed investment scheme in breach of the Corporations Act. Acting Chief Justice Collier pointed out that the operators flat out ignored regulatory warnings and left investors high & dry.
Investor Losses and Court Rulings
The Court made it clear that NGS Group’s lack of the right Australian financial services licence really hurt investors and made it hard for people to trust its management. Some key points from the Court’s ruling are
- NGS Crypto was operating outside the law, prioritizing company interests over investor protection.
- The Court has appointed receivers to sort out digital assets and prevent them from being flogged off.
- Directors Brett Mendham, Mark Ten Caten, and Ryan Brown have had restrictions imposed on them, including a travel ban for Mendham.
The Federal Court has ordered that NGS Group be wound up and that the unregistered scheme be shut down, with liquidators appointed to wind up the remaining assets and distribute them to investors in an orderly fashion. This is all about getting as much cash back to people as quickly as possible.
Safeguarding Assets & Next Steps
To make sure investors’ blockchain holdings are safe, the Federal Court has brought in some receivers – Anthony Connelly, Katherine Sozou, and William James Harris of McGrathNicol. ASIC had been pushing for this action, saying that if they didn’t do it right now, investor assets would be at risk of being flogged off.
Investors may be able to get some of their cash back, but just how much is still unclear. Some things to keep in mind are
- The receivers will let people control who gets access to the digital assets.
- The liquidation process will make sure that everyone gets a fair share of what’s left over.
- ASIC will keep a close eye on the remaining operators in the Australian crypto sector.
This case shows just how seriously Australia’s regulators are taking the crypto sector and that running an unlicensed financial scheme is a terrible idea.
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