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Block Earner has unveiled a new crypto-backed loan product for the Australian market, amid an ongoing tussle with a federal regulator over its shuttered Earn product.

Australian fintech firm Block Earner is charging ahead with plans to launch a crypto-backed loans product, despite staring down an upcoming court date with the financial regulator for allegedly offering financial products without a license.

The new crypto loan product allows Australian crypto investors to use crypto as collateral to borrow cash. Coinbase once offered a similar service to its U.S. customers but shuttered it in May this year.

The initial rollout from Block Earner is expected at the end of September and will initially only allow loans using Bitcoin as collateral.

Block Earner co-founder Charlie Karaboga told Cointelegraph that the new loan products have been designed in a “very conservative way” in a bid to fit neatly into an existing licensing model.

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Karaboga’s firm was burned in November last year, after it was sued by the Australian Securities and Investments Commission (ASIC) for allegedly offering crypto-linked fixed-yield earning products without an Australian Financial Services (AFS) license.

At the time, Karaboga lashed out against the regulator for its lack of clarity, claiming that his firm had spent considerable time and resources building out products he believed were compliant with ASIC’s existing guidelines.

“Our position remains the same. There is no clear regulation in Australia.”

“Like any company in the fintech ecosystem, before we launched the product we got legal opinions. We think that there was no sufficient regulation, or sufficient licenses for us to apply,” Karaboga added.

However, Charlie said that the regulatory moves against Block Earner and competitor crypto company Finder were largely reactive, and likely due to the FTX crash in November.

"ASIC has commenced civil penalty proceedings in the Federal Court against fintech company Block Earner alleging it provided unlicensed financial services in relation to its crypto-asset based products..." https://t.co/MpgKojxRRG #cryptolaw
— Aaron Lane (@AMLane_au) November 23, 2022

“We were impacted, unfortunately, most likely probably because we were more visible with our product compared to others, because they were using as an ancillary product, whereas we were using a core product.”

Despite being unaffected by the fallout of FTX, in the wake of ASIC’s legal action, Karaboga said he closed the company’s “earn” products and paid back all users.

The company appears to have learnt its lesson. James Coombes, head of business at Block Earner said the new launch won’t see the same fate as their Earn product, as it already fits within the rules of an Australian credit license.

“There is a core difference,” said Coombes. “The Earn product — there was no clear guidance on whether or not a license was required, and that’s why we hold a conflicting view. Whereas this one, the clear guidance is that a license is required to provide consumer credit. So we went and got the license.”

Hopes for clarity

Looking forward, Karaboga said that faster regulatory progression in jurisdictions such as Singapore, Hong Kong and the United Kingdom will pressure the Australian government to catch up, or risk losing market share of crypto enterprises.

“I’m expecting within 12 to 18 months, we’ll see some more clarity.”

Karaboga explained that because Australia is one of the wealthiest countries by way of per-capita GDP and because Australians were “early starters” in the crypto industry, its citizens had become prime targets for scammers.

Ultimately, Karaboga asserted that domestic regulators are firmly pro-crypto and want to “push that innovation” moving forward.

This is a view that was shared by Binance Australia General Manager Ben Rose who recently told Cointelegraph he was confident Aussie regulators would side with crypto in the long-term.

As recently as Sept. 6, crypto giant Coinbase listed Australia as one of its primary locations for expansion outside of the U.S.

Block Earner’s Federal Court hearing is scheduled for November this year, with a decision to be handed down by January 2024.

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Block Earner sued over crypto-yield products, CEO calls for clarity

November 24, 2022 Coin Telegraph

AFS

Block Earner CEO Charlie Karaboga said it was a “disappointing outcome” given it had spent “considerable resources” to adhere to existing guidelines.

The CEO of fintech firm Block Earner has lashed out over the “lack of clarity” in Australia’s financial licensing regime after his company was sued by the country’s financial services regulator for providing unlicensed crypto-based investment products.

The Australian Securities and Investment Commission (ASIC) announced on Nov. 23 local time that it started civil legal proceedings against the company because it offered three crypto-linked fixed-yield earning products without an Australian Financial Services (AFS) license.

ASIC stated that the products should have been licensed as they were “managed investment schemes” where investors contribute money that is pooled together for an interest in the scheme.

The products, named “Crypto Earner”, “USD Earner” and “Gold Earner,” offered yields through users depositing Australian dollars that would be converted to Bitcoin (BTC), Ether (ETH), USD Coin (USDC) or PAX Gold (PAXG) depending on the product according to Block Earner’s website.

The crypto-assets are then lent to borrowers on Decentralized Finance (DeFi) protocols Aave (AAVE) and Compound Finance (COMP) to generate yield for the product.

ASIC Deputy Chair Sarah Court aired her concern that Block Earner offered the products without “appropriate registration” or an AFS license that she claimed left “consumers without important protections,” adding:

“Simply because a product hinges on a crypto-asset, does not mean it falls outside financial services law.”

In an emailed statement to Cointelegraph Block Earner CEO and co-founder, Charlie Karaboga, said although the firm “[understands] the backdrop” it was a “disappointing outcome.”

He said it welcomes regulations, claiming the firm “spent considerable resources building regulatory infrastructure” to be able to offer services “under existing guidelines provided by ASIC.”

Karaboga took aim at the unclear regulatory environment for crypto in the country and said the “lack of clarity [...] creates friction between regulators and innovators,” adding:

“In an ideal world, we would build these products in a regulatory sandbox with more clarity around licensing regimes. In the future, we look forward to working with ASIC and other regulators in this space.”

According to Karaboga, Block Earner had filed for a credit license and advised ASIC it would apply for an AFS license for its upcoming products as “the licensing requirements are clear.”

ASIC has previously given a warning to crypto-asset providers in the country after it took action against the creators of the Qoin token.

It said its “key priority” is targeting “unlicensed conduct and misleading promotion of crypto-asset financial products” after it alleged the Qoin token creators were “misleading” its users.

Crypto ad spending may be down, but awareness remains critical: Experts

August 18, 2022 Coin Telegraph

Block Earner

Though crypto television ad spending is down, crypto firms continue to see ad spending as important to keep their brands relevant during a down market.

Crypto television advertising spending has reportedly fallen off a cliff in the United States, reflecting the current state of the markets, however, that's no excuse to take a break, two crypto firms tell Cointelegraph.

An Aug. 17 report from Bloomberg highlighted that television ad spending among the largest crypto trading firms hit the lowest mark in over a year, with only $36,000 spent in July according to ISpot, down 99.9% from $84.5 million in February.

The $84.5 million ad spend was achieved during the U.S. Superbowl period when Crypto.com, FTX US, and Coinbase splurged on high-profile ads to raise awareness of their services.

But despite the reported decline in TV ad spend, some crypto firms, such as Singapore-based digital asset management firm IDEG Limited say they continue to spend heavily on advertising to maintain brand awareness.

IDEG CIO Markus Thielen told Cointelegraph that his company has been “very conservative” in regards to its crypto investments, giving them room to get into a “very good position [...] to take advantage of this current slowdown.”

Thielen said that advertising is critical for a number of reasons, not least of which is raising brand awareness.

“We see this part of our duty to educate, give back to the community, build our brand, and provide general support.”

On the other hand, Apurva Chiranewala, general manager at Australia-based crypto investment platform Block Earner told Cointelegraph last month that the firm had dialed back its marketing efforts amid the "FUD" of the current bear market.

However, he told Cointelegraph that his company had shifted towards efforts that involve educating the market instead.

"Instead of us paying money to un-FUD the market, we thought its better to [...] focus on building and answering questions and educating the market."

Bill Daddi told Bloomberg that if other major firms decide to advertise on TV again, their messaging would likely change. Daddi, the president of marketing agency Daddi Brand Communications, said that earlier ads focused on pushing FOMO, but that firms might shift to education as new and existing users recover from the ongoing bear market.

TV ad spending may be down, but advertising through sports partnerships is still going strong. The Financial Review reported on Aug. 10 that crypto companies like Binance Holdings, OKX, and FTX have spent over $2.4 billion on sports marketing over the past 18 months. They are spending on partnerships with sports team Man City for $12 million, and for the naming rights to an NBA sports stadium in Florida for $135 million.

Block Earner

Hopes for clarity

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