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ASIC Takes Action Against Collapsed Crypto Mining Companies
The Australian Securities and Investments Commission (ASIC) has stepped in following the collapse of several cryptocurrency mining companies under the umbrella of NGS Companies. In a significant move, a Federal Court has authorized the appointment of receivers for the digital assets previously owned by the companies and their executives, including Brett Mendham, Ryan Brown, and Mark Ten Caten.
Civil proceedings have begun against the trio, with allegations of risky financial practices and improper management leading to substantial investor losses.
Crypto Mining Collapse Leaves Investors $41 Million in the Red
The downfall of these companies has resulted in significant financial distress for approximately 450 investors, with combined losses amounting to more than USD $41 million. The ASIC claims that the directors of the NGS Companies encouraged investors to set up self-managed super funds (SMSFs) and invest in highly volatile crypto assets.
Brett Mendham has also been barred from leaving Australia as the court fears further dissipation of the investors’ assets.
Regulatory Response and Investor Warnings
ASIC Chair Joe Longo has issued a warning to investors regarding the inherent risks associated with using SMSFs for cryptocurrency investments. This case serves as a critical reminder of the volatility and regulatory scrutiny surrounding crypto investments.
Other Crypto Funds Also Affected
The crypto turmoil extends beyond NGS Companies. Other firms like DCA Capital and Digital Commodity Assets have also been thrust into liquidation, potentially increasing the total owed to investors to over $150 million.
KordaMentha has been appointed as the liquidator for these firms as well, tasked with unravelling the financial dealings and securing any remaining assets for the affected investors.
The Bigger Picture
This series of events highlights the ongoing challenges within the crypto industry in Australia, especially concerning regulatory compliance and investor protection. ASIC’s proactive measures indicate a stringent approach to oversight and enforcement, aiming to stabilize the financial and investment landscape in the face of emerging digital assets.
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