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Australian Crypto Mining Companies Collapse into Liquidation Owing 450 Investors

The Federal Court has granted approval to the Australian Securities and Investments Commission (ASIC) to designate receivers for digital assets owned by a cluster of defunct cryptocurrency mining firms and their sole proprietors.

ASIC Takes Action Against Collapsed Crypto Mining Companies

ASIC initiated civil proceedings against three cryptocurrency mining entities, collectively referred to as the NGS Companies. The legal action also involved the directors of these mining ventures: Brett Mendham, Ryan Brown, and Mark Ten Caten.

As per ASIC’s statement on Friday, the court ruling additionally prohibited Brett Mendham from leaving Australia. The regulatory body sought these measures due to concerns that investors in these cryptocurrency mining operations “are at risk of dissipation.”

Crypto Mining Collapse Leaves Investors $41 Million in the Red

The collapsed cryptocurrency mining firms are now in liquidation, with debts totaling over USD $41 million owed to 450 investors. Allegedly, these companies targeted investors to establish self-managed super funds (SMSFs) and subsequently converted them into cryptocurrency.

“In the proceedings, ASIC alleges that the NGS Companies breached section 911A of the Corporations Act by providing financial services without an Australian financial services license,” the release stated.

The regulator is now holding the companies accountable for unlawfully promoting investment products tied to cryptocurrency mining.

ASIC Chair Joe Longo cautioned investors to carefully assess risks before utilizing their SMSF to invest in cryptocurrency-related ventures such as mining.

“These proceedings should serve as a warning to the crypto industry that products will be subject to ongoing scrutiny by ASIC to ensure compliance with regulatory obligations, thus safeguarding consumers,” he emphasized.

Three Other Crypto Funds Thrust Into Liquidation in Australia

Alongside the NGS Companies, other cryptocurrency funds in Australia—DCA Capital, Digital Commodity Assets, and the Digital Commodity Assets Fund—have also been compelled into liquidation.

With the collapse of these crypto funds occurring within a week of each other, the combined debts to investors potentially exceed $150 million. The Federal Court has appointed liquidators from KordaMentha to oversee the three firms operated by Balanian, which provided cryptocurrency investment opportunities.

Moreover, liquidators have been assigned the responsibility of identifying additional investors and conducting thorough investigations. Despite the allegations, the Balanian team has not yet provided a response.

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Cryptocurrency is essentially virtual money that operates in a decentralized manner, not through a bank but directly on multiple independent computers.

Every cryptocurrency has two main components: the units of digital exchange called “coins” and the network within which the exchange takes place. These units can be transferred between wallets and exchanged on exchanges. The networks in which these coins exist are called blockchains, which translates to “chains of blocks.”

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