The collapse of Australia crypto mining company NGS leaves hundreds of investors facing huge financial losses. Image by Sujha Sundararajan, Midjourney.
Australian regulator has received a nod from a Federal Court to appoint receivers for digital assets held by a group of collapsed crypto mining companies and their sole owners.
ASIC Takes Action Against Collapsed Crypto Mining Companies
The Australian Securities and Investments Commission (ASIC) launched civil proceedings against three crypto-mining firms, collectively known as NGS Companies. The proceedings also included the directors of these mining schemes: Brett Mendham, Ryan Brown, and Mark Ten Caten.
We have commenced civil proceedings against #blockchain mining companies NGS Crypto, NGS Digital and NGS Group – and their directors – for allegedly providing financial services without a licence pic.twitter.com/XpKcXCBZxt
— ASIC Media (@asicmedia) April 12, 2024
According to a Friday statement from ASIC, the court order also restrained Brett Mendham from traveling outside Australia. The regulator applied for these orders because it thinks investors in these crypto-mining schemes “are at risk of dissipation.”
Crypto Mining Collapse Leaves Investors $41 Million in the Red
The crypto mining firms collapsed into liquidation owing 450 investors more than US$41 million. The companies allegedly targeted investors to establish self-managed super funds (SMSFs) and converted them into cryptocurrency.
The release read, “ASIC alleges in the proceedings that the NGS Companies contravened section 911A of the Corporations Act by providing financial services without an Australian financial services license.”
The regulator is now holding the companies accountable for illegally marketing investment products backed by crypto mining.
ASIC Chair Joe Longo warned investors to consider risks before using their SMSF to invest in crypto-related investments like mining. “These proceedings should also send a message to the crypto industry that products will continue to be scrutinized by ASIC to ensure they comply with regulatory obligations in order to protect consumers.”
Three Other Crypto Funds Thrust Into Liquidation in Australia
In addition to NGS Companies, fellow crypto funds in Australia – DCA Capital, Digital Commodity Assets, and the Digital Commodity Assets Fund – have been busted to liquidation.
Following a collapse of these crypto funds within a week, the schemes potentially owe more than $150 million to investors. A Federal Court has appointed liquidators from KordaMentha to these three firms operated by Balanian that offered cryptocurrency investments.
Additionally, liquidators are supposed to investigate to uncover more investors. Despite the allegations, the Balanian team has yet to respond.
