Block Earner

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

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 and Compound Finance 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

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.

A Wednesday 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.

Despite the reported decline in TV ad spending, 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 chief investment officer Markus Thielen told Cointelegraph that his company has been “very conservative” in regard 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 toward 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, the 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.

Investors shifting toward lower-risk crypto yields — Block Earner GM

The Australian fintech company has seen a surge in investors wanting a “less risky version” of double-digit crypto returns.

Block Earner, an Australian fintech company, says the fall of Terra in May has led to “positive surprises” for his company, with investors beginning to find their way toward the lower-risk crypto yield products they offer.

Speaking to Cointelegraph, the company’s general manager Apurva Chiranewala revealed that the company has seen a surge of investors previously seeking double-digit returns but now wants a “less risky version” of those returns:

“Given that the risks have gone up significantly for those returns, those guys have actually started coming in engaging with us because we look like the less riskier version of those double-digit return products.”

Before their collapse, crypto lending platforms such as Celsius and Anchor Protocol offered annual percentage yields (APYs) of up to 20% for users who locked their digital assets up with them.

Block Earner is a blockchain-powered fintech company that allows access to crypto-related yield-generating products. Still, Chiranewala explained the platform is aimed at those that want exposure to the crypto markets but have a lower risk appetite.

Its Gold Earner and United States dollar Earner products currently generate single-digit yields.

Data shared by Block Earner to Cointelegraph shows that the Terra fiasco coincided with an increase in withdrawal events at the beginning of May and again in mid-June due to the fall of Celsius. However, there’s been a steady return to normal levels since.

Australian dollar (AUD) cash deposits have also remained steady over the April to July period, while the company’s user base has increased an average of 15% month on month.

Chiranewala also stated that over the last few weeks, he had seen a “high degree of interest” from institutional investors, including hedge funds, venture capital (VC) and superannuation funds (retirement funds):

“We are almost forced to now simultaneously build institutional products because the interest in that space is massive.”

“There are VCs with treasuries, there are hedge funds, there are private funds […], and then there are super funds that have a mandate for a very small portion of the portfolio to be deployed into high-yielding assets,” he added.

Chiranewala admits that the company has not been entirely immune to the slump in the crypto markets. Block Earner has had to pull back its user-acquisition marketing spend:

“In the environment that we are in right now, it makes very little sense for us to market and acquires users. So we stopped, we actually pulled back a lot on our marketing strategy.”

“You naturally see a little bit of a softer trajectory of growth, as opposed to a steeper, you know, curve that grows week on week,” he said.

Earlier this month, a CoinGecko report stated that the decentralized finance (DeFi) market cap fell 74.6% from $142 million to $36 million over the second quarter, due mainly to the collapse of Terra and its stablecoin TerraUSD Classic (USTC) in May.