- An Australian court has ordered the shutdown of NGS Crypto, a crypto retirement company.
- Liquidators have received only $4.4 million of the estimated $40 million invested by them.
- The ASIC took swift action, obtaining freezing orders against the company’s assets and directors.
In a major crackdown on unlicensed financial operations, an Australian court has ordered the shutdown of NGS Crypto, a digital asset company that promised investors a lucrative crypto-based retirement solution. The Federal Court’s decision, handed down during the Christmas week, brings to an end the operations of the Gold Coast-linked group, which allegedly operated as an unlicensed financial services business and posed a serious threat to investors.
This development highlights the ongoing risks associated with unlicensed financial services and the importance of regulatory oversight in protecting investors. With over 450 investors affected, the collapse of NGS Crypto serves as a stark reminder of the importance of due diligence and regulatory compliance.
How NGS Crypto Turned into a $40M Scandal?
According to the latest reports, an Australian court has asked NGS Crypto, a crypto retirement solution, to close its operations. This decision comes after liquidators were only able to recover $4.4 million of the estimated $40 million invested by the public. The court says that the company has left many investors with significant losses.
Reportedly, the court found that NGS Crypto, linked to the Gold Coast, had operated as an unlicensed financial services business, posing a serious risk to investors. The court’s order, issued during Christmas week, highlights the severity of the situation and the need for regulatory oversight in the crypto space.
As the court stated, the company offered “digital mining packages” that promised investors fixed annual returns of up to 16% and a guaranteed return of their principal investment. Australia’s corporate regulator raised concerns about the company’s claims, which led to the court ruling. The court accused NGS Crypto of breaching laws by operating without a license and violating consumer protection regulations.
Court Protects Investors from Further Harm
Justice Berna Collier has ordered the permanent shutdown of NGS Crypto and its related entities, prohibiting them from offering financial services due to the significant risks posed to retail investors and repeated breaches of corporate regulations.
Over six years, more than 450 investors poured money into the scheme, often using self-managed retirement accounts that gave the operation a feeling of legitimacy. The company’s marketing material touted predictable income, capital protection, and blockchain expertise, especially targeting older investors and retirees. These promises, however, were overshadowed by the company’s failure to comply with financial regulations, ultimately leading to the court’s decisive actions.
Previously, in April, the Australian Securities and Investments Commission (ASIC) obtained freezing orders to prevent the movement of assets, targeting NGS Crypto and its directors Ryan Brown, Brett Mendham, and Mark Ten Caten. As part of the action, Mendham’s passport was confiscated. While Ten Caten is believed to be outside Australia, Brown was recently located in Brisbane. The freezing orders remain in effect, ensuring that assets are preserved pending further court proceedings.
McGrathNicol, an advisory firm, has been appointed as the liquidator and receiver for NGS Crypto’s assets. With court-granted powers, McGrathNicol was tasked with tracing the remaining funds. However, the firm warns that valuing the assets is challenging due to cryptocurrency price volatility. Some assets are locked in staking arrangements, which may not mature until 2037, further complicating the process. Moreover, McGrathNicol faced the added complexity of determining which crypto assets belong to individual investors.
