Finder: ASIC to continue to pursue cases to clarify crypto regulation as the Federal Court finds that a crypto-asset is not a debenture

22 March 2024
Edward Martin, Partner, Sydney

The Federal Court has handed down its second significant decision involving crypto assets this year. The judgment in ASIC v Finder Wallet Pty Ltd[1] (Finder) follows the recent decision in the BlockEarner case[2] and provides some further guidance for crypto-asset issuers attempting to navigate the present uncertainty around the intersection of digital assets and financial regulation.

The Finder case dealt with the primary issue of whether the ‘Finder Earn’ product issued by Finder Wallet Pty Ltd (Finder Wallet) constituted a ‘debenture’ as defined by the Corporations Act 2001 (Cth) (Corporations Act) and consequently, whether Finder Wallet had contravened the Corporations Act by carrying on a financial services business without holding an Australian Financial Services Licence (AFSL).

The Federal Court found in favour of Finder Wallet and dismissed ASIC’s claim. In a speech following the decision, however, ASIC Commissioner Alan Kirkland has emphasised that ASIC is not afraid to pursue cases where the law might be considered unclear.[3] With a further two crypto-related matters brought by ASIC currently before the courts, the sector remains a focus for the securities regulator.


The proceeding centred around the Finder Earn product offered by Finder Wallet. The product involved customers converting fiat Australian dollars into a stablecoin form of cryptocurrency named ‘TrueAUD’. Customers could then transfer or allocate the TrueAUD to Finder Wallet in exchange for a ‘return’ on their investment at a rate of 4.01% p.a. (or a promotional rate of 6.01% p.a.). Alternatively, customers could use the TrueAUD for the purchase and sale of different cryptocurrencies.

ASIC contended that Finder Earn constituted a ‘debenture’ as defined by the Corporations Act. Section 9 of the Corporations Act defines a ‘debenture’ of a body as:

a chose in action that includes an undertaking by the body to repay as a debt money deposited with or lent to the body. The chose in action may (but need not) include a charge over property of the body to secure repayment of the money.’

ASIC commenced proceedings against Finder Wallet in December 2022 seeking declarations that Finder Earn was a debenture and that Finder Wallet had engaged in a financial services business without the requisite AFSL. ASIC’s case was that the product met the above definition because customers deposited money with, alternatively lent money to, Finder Wallet, which promised to repay the money as a debt.

Finder Wallet defended the proceedings, maintaining that Finder Earn did not meet the definition of a debenture as it involved customers first purchasing a separate crypto-asset product from FinderWallet, TrueAUD, and then lending that crypto-asset to Finder, rather than directly depositing or loaning fiat Australian dollars into Finder Wallet.


Justice Markovic undertook a detailed analysis of the elements of the test for a debenture under section 9 of the Corporations Act and the relevant terms of the Finder Earn product.

His Honour was required to address three main questions in assessing whether Finder Earn was a debenture:

  • Was there was a chose in action?

The parties were not in dispute on this issue. The Court was satisfied that a chose in action existed because, upon acquiring or investing in the Finder Earn product, a customer had a contractual right at the end of the term to be paid an amount of TrueAUD by Finder and that right could be enforced.

  • Was there money deposited with or lent to the body?

The decision largely turned on this issue. The Court accepted Finder Wallet’s submissions and found that the Finder Earn product did not constitute the making of a loan or deposit of money. Rather, the product involved a customer purchasing a form of property from Finder Wallet in the form of TrueAUD in exchange for Australian dollars. The customer then transferred that property to Finder Wallet to use as it saw fit. It could not therefore be characterised as a deposit or loan of ‘money’ to Finder Wallet.

  • Was there an undertaking by Finder Wallet to repay moneys ‘deposited or lent’ as a debt?

Justice Markovic found that, just as there were no moneys deposited or lent, there was equally no undertaking by Finder Wallet to repay any moneys as a debt. Rather, there was a contractual promise to return to the customer the TrueAUD allocated by the customer to Finder Wallet together with the return earned on that allocation over the relevant earn term, which was also paid in TrueAUD.

His Honour concluded that the Finder Earn product did not meet the criteria for a debenture and accordingly was not a financial product for the purposes of the Corporations Act. It followed that Finder Wallet had not contravened the Corporations Act by carrying on a financial services business without an AFSL and the proceeding brought by ASIC was dismissed.


The case is the second significant decision involving crypto-assets and is likely to be one of many. ASIC has signalled to the crypto market with these recent prosecutions and statements to the market that it intends to continue crypto enforcement action even where there are real risks of being unsuccessful noting the benefits of such action in helping to clarify the application of the financial services regime to crypto-assets. This latest decision provides some further guidance to those operating in the space and emphasises the need for crypto-asset providers to carefully consider the structure and terms of their product offerings to minimise the risk of falling foul of the expanding scope of applicable financial services regulations.

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Authored by:

Edward Martin, Partner
Philip O’Brien, Senior Associate
Jin Lim, Lawyer

[1] ASIC v Finder Wallet Pty Ltd [2024] FCA 228.

[2] ASIC v Web3 Ventures Pty Ltd [2024] FCA 64.


This update does not constitute legal advice and should not be relied upon as such. It is intended only to provide a summary and general overview on matters of interest and it is not intended to be comprehensive. You should seek legal or other professional advice before acting or relying on any of the content.

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