ASIC sues three blockchain mining companies


ASIC has taken legal action against three blockchain mining companies - NGS Crypto, NGS Digital, and NGS Group - along with their sole directors Brett Mendham, Ryan Brown and Mark Ten Caten.

The corporate regulator has accused the NGS companies of targeting Australian investors, encouraging them to invest in blockchain mining packages with fixed-rate returns.

It said these investors were then asked to transfer their funds from regulated super funds to self-managed super funds (SMSFs) and convert them into cryptocurrency.

Blockchain mining companies sued by ASIC

Early investigations indicate that around 450 Australians invested approximately US$41 million through the NGS companies.

As a result, ASIC has filed proceedings against the NGS companies, alleging a contravention of sections 911A of the Corporations Act by providing financial services without an Australian Financial Services Licence (AFSL).

ASIC is also seeking interim and final injunctions against the NGS companies to prevent them from providing financial services in Australia without an AFSL.

"Australians who decide to self-manage their super should consider the risks before using their SMSF to invest in crypto related investment products such as blockchain mining. These proceedings should also send a message to the crypto industry that products will continue to be scrutinised by ASIC to ensure they comply with regulatory obligations in order to protect consumers," ASIC chair Joe Longo said.

The Federal Court last week appointed Anthony Connelly, Kathy Sozou, and Jamie Harris of McGrathNicol as receivers over the digital currency assets of the NGS companies and of Mendham, Ten Caten, and Brown.

ASIC said it applied for these orders because it was concerned that the digital assets of investors were "at risk of dissipation" and felt that the appointment of a receiver was the best way to protect them.

The Court also made orders restraining Mendham from travelling outside of Australia.

While no return date has been scheduled for the proceedings yet, ASIC's investigation into the NGS companies and their directors is ongoing.

The NGS companies are separate and not connected in any way to NGS Super.

NGS Super said: "NGS Super has also had prior litigation in the Federal Court of Australia against both NGS Crypto and NGS Group in order to protect its Trademark, and most importantly, its members."

"NGS Super is not involved in selling cryptocurrency or crypto related products including but not limited to blockchain, and we would never approach our members to discuss or sell this type of product."

This article first appeared on Financial Standard

Get stories like this in our newsletters.

Related Stories


Andrew McKean is a journalist at Financial Standard. He covers superannuation, wealth management and financial advice. Prior to this he has worked freelance for not-for-profit organisations and corporate educators. Andrew has a Bachelor's degree in journalism and non-fiction writing from Macquarie University. Connect with him on LinkedIn or Twitter.