Two Australian cryptocurrency companies collapse into liquidation, owing investors over $160 million

Two Australian cryptocurrency companies have collapsed into liquidation, leaving hundreds of investors in the lurch with losses totaling over $160 million. The Australian Security and Investments Commission (ASIC) has taken action against NGS companies — NGS Crypto Pty Ltd, NGS Digital Pty Ltd, and NGS Group Ltd — as well as their directors, Brett Mendham, Ryan Brown, and Mark Ten Caten.

These companies, which are blockchain cryptocurrency mining firms, allegedly targeted Australian investors by offering self-regulated superannuation funds that would be converted to cryptocurrency and invested in blockchain mining packages promising fixed-rate returns. ASIC believes that around 450 investors poured $62 million into these schemes without the companies holding the necessary Australian license to provide financial services.

In response to these allegations, the Federal Court has appointed liquidators to oversee the digital currency assets of NGS companies and their directors, in order to prevent the dissipation of these assets. Mendham has been prohibited from leaving Australia, and ASIC is seeking to prevent NGS companies from offering financial services without a license.

ASIC chair Joe Longo has cautioned Australians about the risks of investing their self-managed super funds in cryptocurrency, emphasizing the importance of regulatory compliance to protect consumers. In a similar vein, DCA Capital, Digital Commodity Assets Pty Ltd, and the Digital Commodity Assets Fund have also been placed into liquidation, with federal court proceedings initiated against director Ashod Balanian over concerns of mismanagement and operating without the necessary licenses.

Liquidators appointed to wind up these companies have uncovered debts of $100 million owed to investors, prompting the Federal Court to freeze Balanian’s assets and confiscate his passport. Despite repeated attempts to engage with Balanian, he has failed to cooperate with the liquidation proceedings.

These developments highlight the risks associated with investing in cryptocurrency and serve as a reminder for both investors and industry players to adhere to regulatory requirements to safeguard against financial losses.