Two Australian cryptocurrency companies have gone into liquidation, owing hundreds of investors more than $160 million (NZ$174 million).
The Australian Security and Investment Commission (ASIC) has launched civil proceedings against the NGS companies (NGS Crypto Pty Ltd, NGS Digital Pty Ltd and NGS Group Ltd) and the directors of these schemes: Brett Mendham, Ryan Brown and Mark Ten Caten .
NGS companies are blockchain cryptocurrency mining companies.
The companies allegedly targeted Australian investors to set up self-regulated retirement funds, convert the money into cryptocurrency and invest it in blockchain mining packages with fixed-rate returns.
The financial watchdog believes about 450 investors funded $62 million (NZ$67.5 million) through the companies.
It is also alleged that NGS companies provided these financial services without an Australian licence.
The Federal Court on Wednesday ordered that liquidators Anthony Connelly, Kathy Sozou and Jamie Harris of McGrathNicol would be liable for the digital currency assets of the NGS companies and their directors.
ASIC launched the application for this order out of concern that digital assets invested in blockchain mining products were at risk of dissipation.
Mendham has also been prevented from leaving Australia.
The watchdog is also seeking to prevent NGS firms from providing financial services in Australia without a licence.
ASIC Chairman Joe Longo has warned Australians about the risks of investing their self-managed super funds in cryptocurrency investments.
โThese proceedings should also send a message to the crypto industry that products will continue to be scrutinized by ASIC to ensure they meet regulatory obligations in order to protect consumers,โ Longo said in a statement.
Separately, other Australian cryptocurrency funds (DCA Capital, Digital Commodity Assets Pty Ltd and Digital Commodity Assets Fund) have been pushed into liquidation and federal court proceedings have also been launched against the companies' director, Ashod Balanian.
This comes after investor concerns that the funds had not been properly managed, did not have appropriate licenses and may have been operating in breach of managed investment scheme requirements.
KordaMentha liquidators Scott Langdon, Jennifer Nettleton and John Mouawad have been appointed to liquidate the companies and digital assets.
KordaMentha said examination of the funds has so far revealed that $100 million (NZ$109 million) is owed to 100 investors.
On Wednesday, the Federal Court froze Balanian's assets, amounting to $55 million (NZ$59.9 million), and he was ordered to hand over his passport.
Langdon said Balanian has not responded to KordaMentha's request for information, requests for a meeting or for assistance in the liquidation process.
