ASIC v Finder Wallet: bringing "debentures" to digital assets

Person using a cryptocurrency app on his mobile phone.

Finder Wallet Pty Ltd, an AUSTRAC-registered digital currency exchange, successfully defended in the Federal Court of Australia ASIC's prosecution regarding its "Finder Earn" product.

This is the first time the concept of "debentures" has been considered by Australian courts with respect to cryptocurrencies.

The Court found that the Finder Earn product was not a debenture as alleged by ASIC, as there was no deposit with, or loan of money to, Finder Wallet, nor did Finder Wallet give an undertaking to repay such a deposit or loan as a debt. Instead, the Court held that the Finder Earn cryptocurrency was a form of personal property, rather than "money", which was acquired by the customer and transferred to Finder Wallet subject to a contractual right for return of the digital asset in the future.


Finder Wallet enabled customers to deposit Australian dollars (AUD) into an account held by Finder Wallet. Then, using Finder Wallet's app, customers could use funds held in their account to purchase Finder Wallet's cryptocurrency, TrueAUD (TAUD), at which point the TAUD, together with all legal title, was transferred to Finder Wallet.1 In return, customers would receive a right to repayment of the amount of TAUD transferred plus 4.01% p.a. (or a promotional rate of 6.01% p.a.) at the end of the "Earn Term". The returned TAUD was converted to AUD before being deposited into the customer's wallet. Customers could not withdraw the TAUD during the Earn Term.

ASIC submitted that the Finder Earn product was a "debenture" under section 9 of the Corporations Act 2001 (Cth) (Act). Under the Act, a "debenture" arises if:

  • money is deposited with or lent to a person (i.e. Finder Wallet);
  • a chose in action (i.e. a personal right to sue to recover some form of property) is created; and
  • the chose in action includes an undertaking by the holder of the money to repay the money deposited or lent, as a debt.

Regulatory requirements: debentures

Under the Act, debentures are a form of security and therefore a financial product.2 Dealing in a financial product constitutes a financial service,3 and repeatedly providing that financial service amounts to a financial services business. Companies conducting a financial services business require an Australian Financial Services Licence (AFSL) to operate, which Finder Wallet did not hold. Additionally, Finder Wallet did not make a "target market determination" nor lodge adequate disclosure documentation required when offering a debenture.

The parties' arguments

ASIC's argument referenced a range of materials, including the relevant Terms of Service (Terms), the Finder App and Finder website, to argue that customers lent AUD to Finder Wallet through a single sequential transaction. In ASIC's view, the acquisition of TAUD, for AUD, was merely notional, with the right to return of funds in AUD amounting to an undertaking by Finder Wallet to repay "loaned AUD" as a debt.

Finder Wallet disagreed. Instead, it argued that its customers merely had the contractual right to receive the TAUD (including interest) at the end of the "Earn Term". In its submission, the Terms alone made clear that two distinct transactions occurred. First, the customer purchased TAUD with AUD; and second, the customer transferred their title in their TAUD to Finder Wallet, in exchange for a contractual right to repayment of the "deposited" TAUD with interest.

Court ruling

The Court found that the Finder Earn product was not a debenture. Critically, the Court held that TAUD was a "species of property" rather than "money", and customers made payments of AUD in exchange for TAUD assets. Therefore, no "money" was deposited with or loaned to Finder Wallet, and the first element of the debenture "test" was not met.

While Finder Wallet's obligation to return TAUD to customers meant a chose in action arose, it was not an undertaking to repay a debt. The purchase of TAUD with AUD was a distinct transaction and customers merely received a contractual promise for the return of TAUD together with interest. The Court was prepared to make this finding despite references to "loans" and "lending" on the Finder Website, as the Terms created a contractual obligation that was fundamentally different to the fundraising activities traditionally associated with the issue of debentures.


On April 10 2024, ASIC announced that it will appeal the Federal Court's decision that the Finder Earn Product was not a debenture under the Corporations Act 2001 (Cth). ASIC's announcement can be found here.

Looking forward

This was a highly anticipated decision by the Federal Court and presents a pathway that promoters of cryptocurrency projects may consider to avoid issuing "debentures" and attracting the associated regulatory burden. However, promoters of cryptocurrency schemes should be aware that their products may fall within other classes of regulated financial products, such as "derivatives".

For more information on any of the issues raised above, please contact a member of our Digital Economy practice.

1 Australian Securities and Investments Commission v Finder Wallet Pty Ltd [2024] FCA 228, 8.

2 Corporations Act s 92(2) and 764A(1)(a).

3 Corporations Act s 766A(1)(b)

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