Australia Federal Court Dismisses ASIC Appeal, Rules Finder Earn Not a Debenture Under Corporations Act

Australia’s Federal Court has dismissed an appeal from the Australian Securities and Investments Commission (ASIC), confirming that Finder Wallet’s now-discontinued crypto yield product, Finder Earn, did not breach financial regulations. The court ruled the product did not qualify as a debenture under the Corporations Act, rejecting ASIC’s claim that it constituted an unlicensed financial offering [1]. This marks the first time an Australian court has addressed whether a crypto-related product meets the legal definition of a debenture, resolving a three-year legal dispute [2].

Finder Earn, active from February to November 2022, allowed users to convert Australian dollars into stablecoins and earn annual returns of 4–6% via transfers to Finder Wallet. The company stated it repaid all customers, returning over 500,000 TrueAUD (approximately A$336,000) [1]. Fred Schebesta, Finder’s co-founder, hailed the ruling as a milestone for Australian fintech, emphasizing the product’s transparency and pre-launch consultation with ASIC. Schebesta hinted at future innovations but provided no details [2].

ASIC has not commented publicly beyond stating it is reviewing the judgment. The decision aligns with a broader trend of Australian courts favoring fintech companies in regulatory disputes. Earlier this year, the Federal Court also ruled in favor of crypto lender Block Earner, determining its Earner product—a fixed-term crypto-backed loan—did not require a financial services license [2]. In that case, the court ordered ASIC to cover Block Earner’s legal costs for both the initial trial and appeal [2].

The rulings highlight the challenges of applying traditional financial regulations to crypto products. The court emphasized that Finder Earn operated as a custodial agreement rather than a debt obligation, noting the absence of fixed returns or guarantees. This distinction is critical, as financial products in Australia are subject to strict licensing and disclosure requirements [1]. While the decisions provide clarity for crypto firms, they also underscore regulatory uncertainty in a sector where technological innovation often outpaces legal frameworks.

Industry observers suggest the rulings could encourage innovation in crypto custody and yield-generating services. However, critics caution that removing the “debenture” label might reduce consumer protections for high-risk products. The volatility inherent in crypto markets contrasts with the court’s focus on the absence of fixed returns, potentially leaving gaps in oversight for users [2].

Finder’s legal victory reflects a cautious judicial approach to balancing innovation and investor protection. By anchoring its decision to the product’s specific terms rather than its technological underpinnings, the court set a precedent for future cases involving tokenized assets or staking rewards [1]. The outcomes for Finder and Block Earner may influence how regulators and courts interpret financial product laws in the context of decentralized finance (DeFi) and other emerging blockchain-based services.

Sources:

[1] [Finder Wallet Didn't Break Law With Earn Product, Aussie Court Rules](https://financefeeds.com/finder-wallet-didnt-break-law-with-earn-product-aussie-court-rules/)

[2] [Finder Earn Wins Legal Battle Over Crypto in Australia](https://www.bitcoininsider.org/article/280205/finder-earn-wins-legal-battle-over-crypto-australia)