In a significant move against unauthorized cryptocurrency operations, Australian regulators have clamped down on two crypto mining companies, leading to a considerable financial loss for hundreds of investors. The Australian Security and Investments Commission (ASIC) has taken decisive action by initiating civil proceedings against NGS Crypto Pty Ltd, NGS Digital Pty Ltd, and NGS Group Ltd, known collectively as the “NGS companies.” This legal action comes after the companies fell into liquidation, leaving investors out of pocket by more than A$160 million ($104 million).
The core of the issue lies in the NGS companies’ approach to attracting local investors. They encouraged the establishment of self-managed superannuation funds (SMSFs), which were then converted into cryptocurrency for investment in blockchain mining packages. These packages purportedly offered fixed-rate returns, a proposition that led approximately 450 investors to entrust A$62 million ($40 million) to these enterprises. However, the ASIC’s investigation revealed that the NGS companies operated without the necessary Australian financial services license, raising significant regulatory concerns.
The situation escalated as the ASIC successfully sought the Federal Court’s intervention to appoint liquidators for the NGS companies’ digital currency holdings, aiming to safeguard the invested digital assets. The regulator’s efforts to stem the potential dissipation of these assets highlight the challenges facing the crypto mining sector. Furthermore, with key figures such as Brett Mendham barred from leaving Australia and the imposition of measures to prevent the NGS companies from offering unlicensed financial services, the case underscores the Australian government’s firm stance on cryptocurrency regulation and investor protection.
