High Court: Block Earner offered crypto yield product illegally

Australia’s High Court issued a unanimous judgment on June 17 that Web3 Ventures Pty Ltd, trading as Block Earner, offered its Earner crypto yield product without an Australian Financial Services licence. The ruling allows the Australian Securities and Investments Commission to pursue civil penalty proceedings and sends the penalty question back to the Federal Court.

Block Earner offered the Earner product between March and November 2022. Customers transferred Australian dollars into a Block Earner bank account. The company converted those funds into digital assets including USDC, PAXG, bitcoin and ether, promised a fixed annual percentage yield and converted crypto back to Australian dollars when customers withdrew.

ASIC opened civil penalty proceedings in November 2022, arguing the product was a financial product provided without an Australian Financial Services Licence. A primary judge in the Federal Court initially ruled for ASIC. The Full Court overturned that judgment in April 2025 after Block Earner’s cross-appeal. ASIC then obtained special leave to appeal to the High Court.

The High Court rejected the Full Court’s conclusion and accepted ASIC’s central legal arguments. The court found it was sufficient that investors’ funds were used to generate a return for both investors and the issuer, writing that “any contention otherwise would ignore the commercial reality of any such financial investment.” The court also held the service operated like a derivative because the return varied with cryptocurrency prices and exchange rates, bringing the product within the statutory definition of a financial product.

ASIC Deputy Chair Sarah Court welcomed the ruling in a statement, noting the decision confirms that the definition of a financial product is broad and technology neutral and covers new products without legislative change. Court added that firms offering returns to consumers or converting between asset types must ensure they are appropriately licensed or authorised before distributing such products.

The High Court based its judgment on the substance of the contractual arrangements rather than on how the product was described or marketed. The matter has been remitted to the Full Court of the Federal Court to reconsider whether Web3 Ventures should face fines or other civil penalties for offering the Earner product without a licence.

Parliament passed the Corporations Amendment (Digital Assets Framework) Act 2026 in April, and ASIC has published an 18-month roadmap to implement the new rules before they commence in April 2027.