Two Australian cryptocurrency firms go bankrupt, leaving $160 million in debt

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

Two Australian cryptocurrency companies, NGS Crypto Pty Ltd, NGS Digital Pty Ltd, and NGS Group Ltd, have collapsed into liquidation, leaving hundreds of investors owed more than $160 million ($174 million NZD). The Australian Security and Investments Commission (ASIC) has taken civil proceedings against the companies and their directors, Brett Mendham, Ryan Brown, and Mark Ten Caten.

Allegations against NGS companies

The companies allegedly targeted Australian investors to establish self-regulated superannuation funds, converting the money to cryptocurrency and investing it in blockchain mining packages with fixed-rate returns. ASIC believes that around 450 investors funded $62 million ($67.5 million NZD) through the companies. Additionally, the companies provided financial services without an Australian license.

Federal Court orders liquidation

The Federal Court has ordered liquidators Anthony Connelly, Kathy Sozou, and Jamie Harris of McGrathNicol to handle the digital currency assets of NGS companies and its directors. ASIC requested this order over concerns that the digital assets invested in blockchain mining products were at risk of being dissipated. Mendham has also been prevented from leaving Australia, and ASIC is seeking to stop NGS companies from providing financial services without a license.

Warning from ASIC chair

ASIC chair Joe Longo warned Australians about the risks of investing their self-managed super funds into cryptocurrency investments. He stated, “These proceedings should also send a message to the crypto industry that products will continue to be scrutinized by ASIC to ensure they comply with regulatory obligations in order to protect consumers.”

Liquidation of other cryptocurrency funds

In a separate case, DCA Capital, Digital Commodity Assets Pty Ltd, and the Digital Commodity Assets Fund have been forced into liquidation, with federal court proceedings initiated against director Ashod Balanian. Concerns from investors about mismanagement, lack of appropriate licenses, and potential breaches of investment scheme requirements led to this action. KordaMentha’s liquidators have been appointed to wind up the companies and their digital assets, revealing $100 million ($109 million NZD) owed to 100 investors. Balanian’s assets have been frozen, and he has been ordered to surrender his passport, as he has not cooperated with liquidation proceedings.

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