Fred Schebesta’s Finder claims its crypto product wasn’t money

Finder, which is currently seeking fresh funding, argues it did not need a financial services licence to offer its Finder Earn product, which paid out investors a “guaranteed” 4 per cent interest rate in return for deposits.

ASIC argues the product was a debenture, which is a long-term security that yields a fixed interest rate and is often used by companies to borrow money.

But Finder disagrees, noting that ASIC itself has maintained its overarching position is that digital assets are property rather than money. ASIC says the process by which Finder Earn operates interacts with fiat currency.

“Although cryptocurrencies share features in common with money in that they can be stores of value and are fungible, they are not money, they are property,” Finder’s lawyers told Justice Bridgette Markovic in the Federal Court last Wednesday.

“This is important because a fundamental part of a debenture is the depositing or lending of money.”

Finder Earn customers deposited Australian dollars into a Finder Wallet, which was then converted to a stablecoin called TrueAUD, which the company said was backed by Australian dollars.

The Finder Earn product was shuttered before the lawsuit began, but it was marketed across morning television shows and in slick digital campaigns targeting young “savers”.

Its launch was the result of an explosion of interest in decentralised finance, or DeFi, where investors were often paid high-interest rates to “lock up” their capital in various systems that mimic banking functions.

These products contributed to the crypto market crash in 2022, when the companies took the customer deposits and lost them in risky trades designed to generate the “guaranteed” interests.

In the absence of any new federal legislation, ASIC has cracked down on crypto businesses using existing financial markets regulation over the past 12 months.

Although Finder is licensed to provide financial services as a representative of Centra Wealth, a disclaimer on the Finder website explained that its Earn product was not offered under that or any other licence.

Regulators brought a similar action against Block Earner, which also offered a high-yield crypto-based product, for allegedly offering unlicensed financial services.

ASIC sued Gold Coast-based BPS Financial over a crypto product known as Qoin in October, alleging unlicensed conduct and the misleading promotion of crypto asset.

The judgment for ASIC’s case against Finder Wallet is expected in the coming months. Mr Schebesta stepped down as Finder chief executive last December but remains executive chair.