Australian Securities and Investments Commission v NGS Crypto Pty Ltd (No 2)

The Australian Securities and Investments Commission (ASIC) brought an application against NGS Crypto Pty Ltd and others in relation to an alleged business involving investments in "blockchain mining operations." The case, NGS Crypto Pty Ltd (No 2), involved an interlocutory application for the variation of ex parte orders, including freezing orders over digital currency assets of the defendants. The key legal issues were whether the sixth defendant should be granted access to his frozen assets to cover his living expenses and reasonable legal costs. The Court considered the necessity of the orders, the balance of convenience, and the potential impact on the administration of justice.

The Court found that the initial ex parte orders were provisional and made without the defendants having the opportunity to present their case. Given the contested nature of the current application, the Court exercised caution in its findings. The Court noted ASIC's concerns regarding the alleged misleading of investors and the significant returns promised, as well as the process of inducing investors to transfer their superannuation into self-managed super funds for high-risk investments.

The Court varied the orders to allow the sixth defendant access to his frozen assets to cover his living expenses and legal costs. The Court reasoned that the sixth defendant, unlike the other defendants, had no involvement in the underlying business activities and needed access to funds for basic living expenses and to defend himself in the proceedings. The Court balanced the need to preserve assets for potential claims against the equities of the case and concluded that the sixth defendant's circumstances warranted special consideration.

The Court issued specific orders allowing the sixth defendant to receive $6,000 per month from the frozen assets for living expenses and permitting the payment of his reasonable legal costs from the same assets. These payments were to be made subject to certain conditions, including the submission of itemised legal bills and the potential for the receivers to seek directions from the Court regarding the reasonableness of the expenses. The Court also outlined the procedures for the receivers to manage these payments and the steps to be taken if the sixth defendant claimed privilege against self-incrimination.

In conclusion, the Court granted the application to vary the orders to provide the sixth defendant with limited access to his frozen assets for essential living expenses and legal costs, while maintaining the overall integrity of the asset preservation and restraint orders.