Federal Court of Australia

Australian Securities and Investments Commission v NGS Crypto Pty Ltd (No 4) [2024] FCA 986

ORDERS

THE COURT ORDERS THAT, UNTIL FURTHER ORDER:

1.    Pursuant to section 37AF(1)(a) of the Federal Court of Australia Act 1976 (Cth), on the grounds set out in section 37AG(1)(a), the following details referred to in the proceeding be prohibited from publication:

(a)    the following details of any clients of the First, Second or Third Defendants:

(i)    their names;

(ii)    their postal or residential addresses;

(iii)    their email addresses;

(iv)    their telephone numbers;

(v)    their drivers’ licence numbers;

(vi)    their dates of birth; and

(vii)    any bank account details associated with them.

(b)    any alphanumeric identifiers referring to the following:

(i)    transaction hashes (also referred to as TxHash or TxID); and

(ii)    digital asset account addresses.

2.    Pursuant to section 37AF(1)(a) and 37AF(1)(b) of the Federal Court of Australia Act 1976 (Cth), on the grounds set out in section 37AG(1)(a), the following documents are to be marked ‘confidential’ on the electronic court file, and not to be published (whether electronically or otherwise), or disclosed or accessed by any person other than:

(a)    Tab 77 of Exhibit PJC-1 of the Affidavit of Peter James Connor sworn 9 April 2024 and filed 15 May 2024;

(b)    Tabs 21 and 33 of Exhibit AJL-1 of the Affidavit of Alex James Lynch sworn 9 April 2024 and filed 10 April 2024;

(c)    Tab 2 of Exhibit AJL-2 of the Affidavit of Alex James Lynch affirmed 26 April 2024 and filed 26 April 2024;

(d)    Tab 5 of Exhibit KNL-1 of the Affidavit of Katie Nicholas Loizou affirmed 4 April 2024 and filed 10 April 2024; and

(e)    Tab 5 of Exhibit KF-1 of the Affidavit of Kaan Finney affirmed 5 April 2024 and filed 10 April 2024.

3.    Costs are reserved.

Note:    Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

REASONS FOR JUDGMENT

COLLIER J:

1    Before the Court is an Interlocutory Application filed on 30 May 2024 (interlocutory application) by the Australian Securities and Investments Commission (ASIC) in QUD 178 of 2024 Australian Securities and Investments Commission v NGS Crypto Pty Ltd ACN 624 825 065 & Ors. By that interlocutory application, ASIC sought non-publication orders and suppression orders in relation to personal details of clients of the first, second and third respondents, and transcripts of public examinations conducted pursuant to s 19 of the Australian Securities and Investments Commission Act 2001 (Cth) (ASIC Act) of the fourth and sixth respondents.

Background

2    The matter first came before the Court by urgent ex parte application filed on 9 April 2024. That ex parte application was heard and determined by Meagher J on 9 April 2024. Judgment was delivered by her Honour on 10 April 2024: Australian Securities and Investments Commission v NGS Crypto Pty Ltd [2024] FCA 373.

3    Justice Meagher made a number of orders in relation to short service, the appointment of receivers, asset preservation, asset disclosure, travel restraint on the fourth defendant, service on third parties, non-party access, and relevantly, non-publication. In relation to non-publication, her Honour ordered as follows:

24.     Pursuant to sections 37AF(1)(a) and (b) and 37AG(1)(a) of the Federal Court of Australia Act 1976 (Cth) that, in order to avoid prejudice to the proper administration of justice, the publication or disclosure of the following is prohibited until 5pm on 11 April 2024, except to enable the Plaintiff to serve the Defendants, and provide copies of the orders to the entities set out in Order 23 for the purpose of enforcing the orders:

(a)     any ex-parte orders obtained by the Plaintiff;

(b)     the Originating Process;

(c)     the Affidavits and the statements referred to in Order 2 filed by the Plaintiff in support of the ex-parte orders;

(d)     any written submissions advanced by the Plaintiff in support of the ex-parte orders; and

(e)     the signed consent of the Receiver.

4    On 30 April 2024, Derrington J made orders varying certain orders of Meagher J, although orders referable to non-publication remained unvaried: Australian Securities and Investments Commission v NGS Crypto Pty Ltd (No 2) [2024] FCA 521.

5    ASIC now seeks further interlocutory orders in relation to non-publication and suppression in the following terms:

Non-publication orders

1.     Pursuant to section 37AF(1)(a) of the Federal Court of Australia Act 1976 (Cth), on the grounds set out in section 37AG(1)(a), the following details referred to in the proceeding be prohibited from publication:

a.     the following details of any clients of the First, Second or Third Defendants:

i.     their names;

ii.     their postal or residential addresses;

iii.     their email addresses;

iv.     their telephone numbers;

v.     their drivers’ licence numbers;

vi.     their dates of birth; and

vii.     any bank account details associated with them.

b.     any alphanumeric identifiers referring to the following:

i.     transaction hashes (also referred to as TxHash or TxID); and

ii.     digital asset account addresses.

Suppression orders

2.     Pursuant to section 37AF(1)(a) and 37AF(1)(b) of the Federal Court of Australia Act 1976 (Cth), on the grounds set out in section 37AG(1)(a), the following documents are to be marked ‘confidential’ on the electronic court file, and not to be published (whether electronically or otherwise), or disclosed or accessed by any person other than:

1.     the Court;

2.     the parties and their legal representatives; or

3.    the receivers appointed pursuant to order 5 of the Orders made on 10 April 2024 (as varied on 30 April 2024) in this proceeding, and their legal representatives.

a.     Tab 77 of Exhibit PJC-1 of the Affidavit of Peter James Connor sworn 9 April 2024 and filed 15 May 2024;

b.     Tabs 21 and 33 of Exhibit AJL-1 of the Affidavit of Alex James Lynch sworn 9 April 2024 and filed 10 April 2024;

c.     Tab 2 of Exhibit AJL-2 of the Affidavit of Alex James Lynch affirmed 26 April 2024 and filed 26 April 2024;

d.     Tab 5 of Exhibit KNL-1 of the Affidavit of Katie Nicholas Loizou affirmed 4 April 2024 and filed 10 April 2024; and

e.     Tab 5 of Exhibit KF-1 of the Affidavit of Kaan Finney affirmed 5 April 2024 and filed 10 April 2024.

Duration of orders

3.     Pursuant to section 37AJ of the Federal Court of Australia Act 1976 (Cth):

a.     orders 1 and 2(a) to 2(c) above shall operate until further order; and

b.     orders 2(d) to 2(e) above shall operate until determination of the proceeding or further order.

General orders

4.     Costs are reserved.

6    As explained in the affidavit of Peter James Connor sworn 9 April 2024 (first Connor affidavit), ASIC is currently investigating a number of alleged serious contraventions of the Corporations Act 2001 (Cth) (Corporations Act), including s 1041G.

7    Further background in these proceedings can be found in the judgments of Meagher J and Derrington J, and my earlier judgment in Australian Securities and Investments Commission v NGS Crypto Pty Ltd (No 3) [2024] FCA 822.

ASIC’s Case

8    ASIC primarily relied on the affidavit of Peter James Connor sworn 30 May 2024 (third Connor affidavit) and written submissions filed on 30 May 2024.

9    No written material was filed in relation to this interlocutory application by any of the other parties. This interlocutory application was decided on the papers.

10    The case put to the Court by ASIC was, in summary, as follows:

    The information outlined in the interlocutory application should be protected. That protection is necessary to prevent prejudice to the proper administration of justice.

    The relevant information is divided into four categories:

•    the clients’ names, postal or residential addresses, email addresses, telephone numbers, drivers licence numbers, dates of birth, and bank account details associated with them (Client Information);

•    transaction hashes, being records of specific transactions between the First, Second and Third Defendants and clients, and digital asset account addresses (Alphanumeric Identifiers);

•    the entirety of any client lists which are exhibited to ASIC affidavits (Client Lists); and

•    the examination transcripts of the Fourth and Sixth Defendants (Examination Transcripts).

    A suppression or non-publication order must be necessary to prevent prejudice to justice, and the onus is a ‘very heavy’ one. Although the bar is higher than whether the order is simply ‘convenient, reasonable or sensible’, that high bar is not an impediment in this case.

    The documents sought to be protected have not yet been published.

    Non-publication orders

•    Unless non-publication orders are made in respect of the Client Information and Alphanumeric Identifiers of clients of the first, second and third defendants, those individuals may have their personal financial dealings with those defendants made public before ASIC has had the opportunity to contact them, potentially causing undue embarrassment and distress to those individuals. As a result, the interests of justice may be prejudiced as potential witnesses may be discouraged from assisting ASIC in its investigation.

•    Publication of the Client Information and Alphanumeric Identifiers of those individuals may expose them to a risk of harm in the form of financial fraud, identity theft or other illegal activities. The need to protect a person’s private information from identity fraud has long been recognised as a ground for suppression or non-publication orders to be made.

•    Alphanumeric Identifiers are analogous to bank account details because it is possible for a Blockchain Explorer to be used to expose information relating to a transaction using Alphanumeric Identifiers.

•    The public interest in open justice does not require private details in the nature of Client Information and Alphanumeric Identifiers to be published. That information is analogous to the information in Australia Securities and Investments Commission v Ferratum Australia Pty Ltd (in liq) [2023] FCA 1043 where non-publication orders were made in respect of personal information including bank account details, in the nature of the Client Information in the present matter.

•    A non-publication order is appropriate in respect of Client Information and Alphanumeric Identifiers, as that information appears in multiple affidavits and submissions, and it is anticipated that further material filed by the parties in the future will refer to that information.

    Suppression orders

•    These proceedings have been the subject of significant media interest. Disclosure of the Client Lists of the defendants may subject the individuals identified in those lists to unwarranted media attention.

•    Disclosure of the Client Lists of the defendants and the Examination Transcripts would potentially compromise or impede the effectiveness of ASIC’s investigation, and any subsequent criminal or civil penalty proceedings.

•    A non-publication order would not impede non-parties from otherwise accessing the Client Lists or Examination Transcripts via a non-party access request. Consequently, a suppression order referable to those documents is more appropriate.

COnsideration

11    This Court has the power to make non-publication orders or suppression orders pursuant to s 37AF of the Federal Court of Australia Act 1976 (Cth). That section provides:

Power to make orders

(1)    The Court may, by making a suppression order or non-publication order on grounds permitted by this Part, prohibit or restrict the publication or other disclosure of:

(a)    information tending to reveal the identity of or otherwise concerning any party to or witness in a proceeding before the Court or any person who is related to or otherwise associated with any party to or witness in a proceeding before the Court; or

(b)     information that relates to a proceeding before the Court and is:

(i)    information that comprises evidence or information about evidence; or

(ii)     information obtained by the process of discovery; or

(iii)     information produced under a subpoena; or

(iv)    information lodged with or filed in the Court.

(2)    The Court may make such orders as it thinks appropriate to give effect to an order under subsection (1).

12    Pursuant to s 37AA of the Federal Court Act, relevant terms are defined as follows:

"non-publication order" means an order that prohibits or restricts the publication of information (but that does not otherwise prohibit or restrict the disclosure of information).

…

"suppression order" means an order that prohibits or restricts the disclosure of information (by publication or otherwise).

13    Section 37AE of the Federal Court Act identifies in relation to the safeguarding of public interest that:

In deciding whether to make a suppression order or non-publication order, the Court must take into account that a primary objective of the administration of justice is to safeguard the public interest in open justice.

14    The grounds for making a non-publication order or suppression order are identified in s 37AG of the Federal Court Act as follows:

Grounds for making an order

(1)    The Court may make a suppression order or non-publication order on one or more of the following grounds:

(a)     the order is necessary to prevent prejudice to the proper administration of justice;

(b)    the order is necessary to prevent prejudice to the interests of the Commonwealth or a State or Territory in relation to national or international security;

(c)    the order is necessary to protect the safety of any person;

(d)     the order is necessary to avoid causing undue distress or embarrassment to a party to or witness in a criminal proceeding involving an offence of a sexual nature (including an act of indecency).

(2)     A suppression order or non-publication order must specify the ground or grounds on which the order is made.

15    The relevant ground for the purposes of s 37AG(2) in the present case is ground (1)(a): the order is necessary to prevent prejudice to the proper administration of justice.

16    For the purposes of this application, I accept the submission of ASIC that Alphanumeric Identifiers and Client Information are analogous to bank account details, and further that that material is likely to be reproduced in the future course of the present proceedings. As such, it is appropriate that this material be the subject of non-publication orders. As Kennett J explained in Australian Securities and Investments Commission v Ferratum Australia Pty Limited (in liq) [2023] FCA 1043 at [58], and as Katzmann J earlier observed in Bayles by his litigation representative Bayles v Nationwide News Pty Limited (No 3) [2020] FCA 1397 at [2], it would bring the administration of justice into disrepute if the Court were to publish sensitive personal financial information or details which would leave consumers vulnerable to identity theft.

17    Turning now to the suppression order sought, I note that ASIC seeks the following material to be suppressed until further order:

a.     Tab 77 of Exhibit PJC-1 of the Affidavit of Peter James Connor sworn 9 April 2024 and filed 15 May 2024;

b.     Tabs 21 and 33 of Exhibit AJL-1 of the Affidavit of Alex James Lynch sworn 9 April 2024 and filed 10 April 2024;

c.     Tab 2 of Exhibit AJL-2 of the Affidavit of Alex James Lynch affirmed 26 April 2024 and filed 26 April 2024;

d.     Tab 5 of Exhibit KNL-1 of the Affidavit of Katie Nicholas Loizou affirmed 4 April 2024 and filed 10 April 2024; and

e.     Tab 5 of Exhibit KF-1 of the Affidavit of Kaan Finney affirmed 5 April 2024 and filed 10 April 2024.

18    The material in these exhibits can be summarised as follows:

    The relevant exhibits to the affidavits of Mr Peter Connor and Mr Alex Lynch constitute Client Lists of the first, second and third defendants; and

    The relevant exhibits to the affidavits of Ms Loizou and Mr Finney contain the Examination Transcripts of the fourth and sixth defendants.

19    I accept the submission of ASIC that the proceedings have been the subject of media interest. I also accept that the benefits of a suppression order in respect of this material would be to maintain the privacy of individuals identified in the relevant client lists, and to prevent improper contact of persons identified in relevant evidence which could prejudice evidence such persons may give in the ASIC investigations. For these reasons I consider it is appropriate that such material be suppressed until further order.

20    I am satisfied that it is appropriate, in order to prevent prejudice to the proper administration of justice, that I make non-publication and suppression orders, until further order of the Court.

Associate:

Dated:    27 August 2024

SCHEDULE OF PARTIES