Australian Securities and Investments Commission v Web3 Ventures Pty Ltd (Penalty)

In the matter of Australian Securities and Investments Commission v Web3 Ventures Pty Ltd (Penalty), the Federal Court was tasked with determining whether Web3 Ventures Pty Ltd, trading as Block Earner, should be relieved from liability for a pecuniary penalty following contraventions of the Corporations Act 2001 (Cth). The dispute centred around Block Earner's offering of its "Earner" product without the necessary Australian Financial Services Licence and without registering it as a managed investment scheme. The Court had to decide whether Block Earner should be relieved of liability for a pecuniary penalty under s 1317S of the Corporations Act, determine the appropriate penalty amount, and address the issue of costs. The central legal issue was whether Block Earner, having acted honestly and obtained competent legal advice, could be relieved from liability for the pecuniary penalty under s 1317S of the Act. The Court considered Block Earner's genuine belief that there was no identified risk of breaching the law and its constrained financial circumstances.

The Court concluded that Block Earner should be relieved from liability for a pecuniary penalty under s 1317S, noting that Block Earner had acted honestly and that it ought fairly to be excused for the contravention. The Court emphasised that relief under s 1317S operates as a dispensing power to excuse the contravener, rather than removing the breach itself. Despite the contraventions, the Court found Block Earner's position to be bona fide and reasonably arguable, and it commended Block Earner's cooperation with ASIC and cessation of the "Earner" product. The Court also noted that Block Earner had adopted a reasonably arguable position throughout the proceedings. Given the constrained financial circumstances of Block Earner, the Court decided that no penalty should be awarded, even if it had not granted relief under s 1317S. Regarding costs, each party was ordered to pay its own costs up to a specified date, with the plaintiff bearing the defendant's costs thereafter.