Digital asset fintech company Block Earner is facing potential penalties after the High Court of Australia ruled that its “Earner” product was a financial product under the Corporations Act.
The move overturned previous Federal Court decisions in a landmark legal case brought by the ASIC against Web3 Ventures (trading as Block Earner).
The High Court on 17 June found the former Earner product – a fixed-yield product that Block Earner voluntarily closed in 2022 – was both a facility through which users made a financial investment and a derivative.
ASIC alleged the product involved customers contributing AUD or crypto-assets which Block Earner then used (or intended to use) to generate returns for users, meaning it amounted to a “financial investment”.
It also argued the product functioned as a derivative because returns varied with crypto-asset values, and alternatively that it was an unregistered managed investment scheme.
ASIC said it took action because of concerns Earner was offered without a licence, leaving investors without important protections.
At first instance, the primary judge found Block Earner had contravened licensing and managed investment scheme provisions by operating a financial services business without an Australian Financial Services Licence (AFSL).
The Court held the Earner product was a financial product because it involved a “financial investment”, and on that basis also found it was an unregistered managed investment scheme. The judge did not ultimately rule on the derivative argument, as the managed investment scheme finding already excluded it from that category.
ASIC Chair Sarah Court welcomed the “important decision”, which clarifies when products that provide a return fall within the existing financial services regulatory regime.
“This reinforces ASIC’s long-standing position that the definition of financial product is broad and technology neutral and so captures new and emerging products without the need to amend the legislation.”
The developments come after the Full Federal Court in April 2025 ruled that Earner was not a financial product, including a financial investment facility or derivative.
Now that it’s been overthrown, the matter will be remitted to the Full Court of the Federal Court to determine whether Block Earner should be liable to pay a penalty and, if so, what penalty should apply.
Block Earner says the case does not relate to Block Earner’s current or future products, including its crypto-backed lending activities under its recently granted Australian Credit Licence, with the company remaining focused on building regulated digital asset lending products for Australian customers.
In a statement, the firm acknowledged the High Court’s decision and confirmed there has been no finding of customer loss, dishonesty, or misconduct.
Co-founder and CEO, Charlie Karaboga, said Block Earner will continue to engage constructively with ASIC and the regulatory process.
“However, it is important to highlight that this proceeding concerns a product that was voluntarily closed in 2022,” he said.
“We continue to believe that legal clarity for Australia’s digital asset sector should come
through proper legislative reform, not retrospective litigation. It is unfortunate that such significant questions about the application of financial services law to digital assets have had to
be tested through enforcement against a small, innovative Australian startup.”
Block Earner says it remains committed to ongoing regulatory engagement and to contributing to the development of fair, forward-looking financial services laws in Australia.
In May 2026, ASIC granted Block Earner an Australian Credit Licence, making it the first digital
asset platform in Australia to be regulated to provide credit products under its own licence.
Block Earner now conducts its lending activities under its own Australian Credit Licence, enabling it to originate, underwrite and offer regulated credit products directly.
Previously, Block Earner operated as a credit representative of existing Australian Credit Licence holder, Mortgage Direct, under ASIC’s regulatory framework.
The licence includes the appointment of Charlie Karaboga and James Coombes as Responsible
Managers.
Separate from these legal proceedings, Block Earner says it will continue to progress its application for an Australian Financial Services Licence as part of its broader regulatory roadmap, ahead of the implementation of Australia’s Digital Assets Framework.
