FEDERAL COURT OF AUSTRALIA

Australian Securities and Investments Commission v NGS Crypto Pty Ltd (No 5) [2025] FCA 1611

ORDERS

PENAL NOTICE

For the purposes of this order:

Asset Preservation and Receiver Orders: means orders 6 to 15, and 26 to 27 of the orders of Justice Meagher made 10 April 2024, as varied by the orders of Justice Derrington made 30 April 2024.

Blockchain Mining Product: means any Facility constituted by an arrangement in the terms or substantially to the effect of the Mining Investment Agreements contained in Exhibit EMS-2 to the affidavit of Elizabeth Mary Stanley affirmed on 7 March 2025 and filed in this proceeding.

Corporations Act: means Corporations Act 2001 (Cth).

Dealing with Investor Funds: includes

(a)     Causing, procuring, assisting or permitting any Investor Funds in the possession or under the control of the First, Second or Third Defendant (as applicable) to be removed from Australia or from the jurisdiction of this Court;

(b)     Selling, charging, mortgaging, encumbering, securing, diminishing, disposing of, parting with possession, making any declaration of trust in relation to, exercising any power to vary or modify any trust deed or any interest under any trust in relation to Investor Funds in the possession or under the control of the first second or third defendant (as applicable).

Digital Currency: means any legal or equitable estate or interest (whether present, future, vested or contingent) including a thing in action, in or to any digital currency, virtual currency, cryptocurrency, digital token, blockchain asset, or right or interest which is recorded or transacted with using blockchain technology or anything similar.

Digital Currency Assets: means Digital Currency held or controlled by the Defendants, including that Digital Currency which was held or controlled by the Defendants as at 10 April 2024 and which was delivered up to the Receivers or is now in the possession or control of the Receivers pursuant to the Receiver Orders.

Facility: has the meaning given by section 762C of the Corporations Act.

FCA Act: means Federal Court of Australia Act 1976 (Cth).

Financial Product Advice: has the meaning given by section 766B of the Corporations Act.

Financial Service: has the meaning given by section 766A of the Corporations Act.

Interest in the NGS Digital Mining Scheme: means a right to benefits produced by the NGS Digital Mining Scheme (whether the right is actual, prospective or contingent and whether it is enforceable or not).

Investor Funds: means money or money's worth (including Digital Currency) received from or provided by any person who is in or who is a resident of Australia in connection with:

(a)     an investment in the Blockchain Mining Product;

(b)    a contribution to the NGS Digital Mining Scheme

Issue: has the meaning given by section 761E of the Corporations Act.

NGS Digital Mining Scheme: means all activities and arrangements whereby the First and Third Defendant and others associated with the First and Third Defendants, elicited or obtained funds from investors for the purpose of engaging in digital asset mining operations or otherwise using such funds for the purpose of providing a return to investors on the funds invested as referred to in paragraph 13 of the Plaintiff’s Concise Statement.

NGS Digital Mining Scheme Members: means those persons who at the date of the order for the winding up of the NGS Digital Mining Scheme have an Interest in the NGS Digital Mining Scheme.

Receivers: means the Receivers appointed by the Court over the Digital Currency Assets by the Receiver Orders.

Remuneration Orders: means the orders of Justice Collier dated 17 July 2024.

SMSF: means a self managed superannuation fund within the meaning of section 17A of the Superannuation Industry Supervision Act 1996.

This jurisdiction has the meaning given in section 9 of the Corporations Act.

Travel Restraint Orders: means orders 18 to 22 of the orders of Justice Meagher made 10 April 2024, as varied by the orders of Justice Derrington made 30 April 2024.

THE COURT DIRECTS THAT:

Pursuant to s 50 of the Evidence Act 1995 (Cth), the Plaintiff may adduce evidence of the contents of the documents contained in exhibit EMS-2 to the affidavit of Elizabeth Mary Stanley affirmed 7 March 2023 in the form of the summary which is contained in exhibit MB-8 to the affidavit of Meredith Bennett sworn 10 July 2025.

THE COURT NOTES THAT:

A.    The Asset Preservation and Receiver Orders and the Remuneration Orders continue in effect until further order.

THE COURT DECLARES THAT:

1.    By consent of the First Defendant, pursuant to section 1317E of the Corporations Act, that the First Defendant, NGS Crypto Pty Ltd, contravened section 911A(1) of the Corporations Act by its conduct between 13 March 2019 and 10 April 2024 in carrying on a financial services business in this jurisdiction without holding an Australian financial services licence, and thereby contravened section 911A(5B) of the Corporations Act.

2.    Pursuant to section 1317E of the Corporations Act, that the Second Defendant, NGS Digital Pty Ltd, contravened sub-section 911A(1) of the Corporations Act by its conduct between 13 March 2019 and 10 April 2024 in carrying on a financial services business in this jurisdiction without holding an Australian financial services licence, and thereby contravened sub-section 911A(5B) of the Corporations Act.

3.    By consent of the Third Defendant, pursuant to section 1317E of the Corporations Act, that the Third Defendant, NGS Group Ltd, contravened sub-section 911A(1) of the Corporations Act by its conduct between 13 March 2019 and 10 April 2024 in carrying on a financial services business in this jurisdiction without holding an Australian financial services licence, and thereby contravened sub-section 911A(5B) of the Corporations Act.

4.    By consent of the First Defendant, pursuant to section 1317E of the Corporations Act, that the First Defendant, NGS Crypto Pty Ltd, contravened sub-section 911B(1) of the Corporations Act by its conduct between 13 March 2019 and 10 April 2024 in providing financial services in this jurisdiction on behalf of the Third Defendant in circumstances where the Third Defendant was carrying on a financial services business and did not hold an Australian financial services licence, and thereby contravened sub-section 911B(4) of the Corporations Act.

5.    Pursuant to section 1317E of the Corporations Act, that the Second Defendant, NGS Digital Pty Ltd contravened section 911B(1) of the Corporations Act by its conduct between 13 March 2019 and 10 April 2024 in providing financial services in this jurisdiction on behalf of the Third Defendant in circumstances where the Third Defendant was carrying on a financial services business and did not hold an Australian financial services licence, and thereby contravened sub-section 911B(4) of the Corporations Act.

6.    By consent of the Third Defendant, pursuant to section 1317E of the Corporations Act, that the Third Defendant, NGS Group Ltd, contravened section 601ED(5) of the Corporations Act by its conduct between 13 March 2019 and the date of this order in operating a managed investment scheme in this jurisdiction, namely the NGS Digital Mining Scheme, in circumstances where the NGS Digital Mining Scheme was required to be registered under section 601EB of the Corporations Act and was not so registered, and thereby contravened section 601ED(8) of the Corporations Act.

7.    By consent of the Third Defendant, pursuant to section 21 of the FCA Act that the Third Defendant, being a body corporate incorporated outside Australia, contravened section 601CD of the Corporations Act by its conduct between January 2018 and the date of this order in carrying on business in this jurisdiction without being registered under Part 5B.2 of the Corporations Act in circumstances where it had not applied to be so registered.

THE COURT ORDERS THAT:

Injunctions

8.    By consent of the First Defendant, pursuant to sections 1101B and/or 1324 of the Corporations Act, that the First Defendant, by itself and its officers, servants, agents, representatives and employees is permanently restrained from:

(a)    arranging the Issue or acquisition of the Blockchain Mining Product;

(b)    arranging the Issue or acquisition of an Interest in the NGS Digital Mining Scheme;

(c)    Dealing with Investor Funds;

(d)    doing any act in furtherance of or in connection with the promotion in Australia of the Blockchain Mining Product or the NGS Digital Mining Scheme;

(e)    promoting the arrangement, and arranging for the Issue to or acquisition by any person of a beneficial interest in a SMSF;

(f)    providing any Financial Product Advice, including, without limitation, opinions or recommendations or reports of either of those things relating to the Blockchain Mining Product, the NGS Digital Mining Scheme or beneficial interests in a SMSF;

(g)    otherwise carrying on a financial services business in Australia, within the meaning of Chapter 7 of the Corporations Act; and

(h)    providing any Financial Service on behalf of a person who carries on a financial services business.

9.    Pursuant to sections 1101B and/or 1324 of the Corporations Act, that the Second Defendant, by itself and its officers, servants, agents, representatives and employees is permanently restrained from:

(a)    arranging the Issue or acquisition of the Blockchain Mining Product;

(b)    arranging the Issue or acquisition of an Interest in the NGS Digital Mining Scheme;

(c)    Dealing with Investor Funds;

(d)    doing any act in furtherance of or in connection with the promotion in Australia of the Blockchain Mining Product or the NGS Digital Mining Scheme;

(e)    providing any Financial Product Advice, including, without limitation, opinions or recommendations or reports of either of those things relating to the Blockchain Mining Product, the NGS Digital Mining Scheme or beneficial interests in a SMSF;

(f)    otherwise carrying on a financial services business in Australia, within the meaning of Chapter 7 of the Corporations Act; and

(g)    providing any Financial Service on behalf of a person who carries on a financial services business.

10.    By consent of the Third Defendant, pursuant to sections 1101B and/or 1324 of the Corporations Act, that the Third Defendant, by itself and its officers, servants, agents and employees is permanently restrained from:

(a)    issuing the Blockchain Mining Product to a person who is in or who is a resident of Australia;

(b)    issuing any Interest in the NGS Digital Mining Scheme to a person who is in or who is a resident of Australia;

(c)    promoting the arrangement, and arranging for the Issue to or acquisition by any person who is in or who is a resident of Australia of a beneficial interest in a SMSF;

(d)    Dealing with Investor Funds;

(e)    doing any act intended to induce persons in Australia to use financial services provided by the First Defendant or which is likely to have that effect;

(f)    doing any act in furtherance of or in connection with the promotion in Australia of the Blockchain Mining Product or the NGS Digital Mining Scheme;

(g)    providing any Financial Product Advice to any person who is in or who resides in Australia, including, without limitation, opinions or recommendations or reports of either of those things relating to the Blockchain Mining Product, the NGS Digital Mining Scheme or beneficial interests in a SMSF; and

(h)    otherwise carrying on a financial services business in Australia, within the meaning of Chapter 7 of the Corporations Act.

Winding up

11.    By consent of the First Defendant, pursuant to section 461(1)(k) of the Corporations Act, the First Defendant be wound up by the Court under the provisions of the Corporations Act.

12.    Pursuant to section 472(1) of the Corporations Act, Mr Anthony Connelly, Ms Katherine Sozou and Mr William James Harris of McGrath Nicol are appointed as joint and several liquidators to the First Defendant (Liquidators).

13.    By consent of the Third Defendant, pursuant to section 583(c)(ii) of the Corporations Act, the Third Defendant be wound up by the Court under the provisions of the Corporations Act and the Liquidators are appointed as joint and several liquidators of the Third Defendant.

14.    Pursuant to section 601EE (2) of the Corporations Act:

(a)    the NGS Digital Mining Scheme be wound up;

(b)    the Liquidators are appointed as joint and several liquidators of the NGS Digital Mining Scheme; and

(c)    subject to any further orders of the Court:

(i)    the winding up of the NGS Digital Mining Scheme be conducted as if the NGS Digital Mining Scheme Members were incorporated as a 'company' or 'corporation' for the purposes of the Corporations Act and the provisions of Parts 5.4B, 5.6, 5.7B and 5.9 of the Corporations Act and Schedule 2 to the Corporations Act (Insolvency Practice Schedule (Corporations)) applied to the winding up (with such modifications as are reasonably necessary in the circumstances); and

(ii)    the liquidators of the NGS Digital Mining Scheme have power to do, in Australia and elsewhere, all things necessary or convenient to be done for or in connection with the winding up of the Scheme, or incidental to the attainment of the winding up of the Scheme, including the functions and powers set out in Chapter 5 of the Corporations Act (with such modifications as are reasonably necessary in the circumstances) as if each reference there to a 'company' or 'corporation’ was a reference to the NGS Digital Scheme Members as notionally incorporated.

15.    Orders 8(c), 9(c) and 10(d) will not apply to any Liquidators of the First Defendant, Second Defendant, Third Defendant or NGS Digital Mining Scheme, and each of them, by themselves or their agents and employees.

THE COURT ORDERS BY CONSENT IN RESPECT OF THE FOURTH DEFENDANT THAT:

16.    Subject to further order, Orders 18 and 21 of the Travel Restraint Orders will apply until 31 March 2026.

Other orders

17.    With respect to the First and Third Defendants, there be no order as to costs.

18.    Costs in respect of the Second, Fourth, Fifth and Sixth Defendants be reserved.

19.    By 4pm on 30 January 2026, the Plaintiff file and serve any material and submissions on which it relies on the issue of costs, such submissions to be of no more than 10 pages in length, with respect to the Second, Fourth, Fifth and Sixth Defendants.

20.    In the event that the Plaintiff files any material and submissions referable to paragraph 19 of these Orders, the matter be listed for further case management in respect of the issue of costs at a date to be fixed.

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

REASONS FOR JUDGMENT

COLLIER ACJ:

1    Before the Court is an application filed by the plaintiff, the Australian Securities and Investment Commission, for relief against three corporate defendants: NGS Crypto Pty Ltd, NGS Digital Pty Ltd and NGS Group Ltd (together, the corporate defendants), as well as three personal defendants, Brett Allan Mendham, Mark James Ten Caten and Ryan Todd Brown (together, the personal defendants). The relief sought by ASIC concerns a cryptocurrency mining investment scheme operated by the corporate defendants, and owned and controlled by the personal defendants.

2    For various reasons through the course of the proceeding, it became clear that the relief sought by ASIC against the defendants was not opposed (other than by Brown), and it was agreed by the parties that there was no need for a final hearing in the matter. ASIC filed submissions on 10 July 2025 and 18 July 2025 concerning the defendants’ alleged breaches of the Corporations Act 2001 (Cth), and the relief it sought referable to those breaches. In summary, in respect of those submissions:

    NGS Crypto and Mendham consent to the orders sought by ASIC;

    NGS Digital does not object to any of the relief sought against it and raised no position on the balance of the orders sought;

    NGS Group and Caten consent to the orders sought against them, and raised no objection to the other orders; and

    Brown submits that no relief is (nor has it ever been) sought against him, and specifically seeks acknowledgment in this judgment that any determinations would not bind him where no relief is sought against him.

3    Despite the preponderance of the relief sought by ASIC not being resisted by the majority of the defendants, I must still be satisfied that the specific relief is appropriate in the circumstances. Accordingly, I will consider each form of relief sought in turn.

BACKGROUND

Factual Background

4    The background facts set out below are drawn largely from ASIC’s Amended Concise Statement filed on 10 July 2025 (ACS), to the extent that the facts set out by ASIC were not disputed by the defendants.

5    NGS Crypto is a company which was registered in Australia on 6 March 2018. Since 23 August 2019, Mendham has been the sole director and secretary of NGS Crypto.

6    NGS Digital is a company which was registered in Australia on 20 November 2018. Since NGS Digital’s registration, Brown has been its sole director and secretary, and is the General Manager of NGS Crypto.

7    NGS Group is a Hong Kong registered company. Mendham and Caten were joint directors and secretaries of NGS Group until 7 September 2022, at which time Mendham ceased to be a director and secretary of NGS Group. Since 7 September 2022, Caten has been the sole director and secretary of NGS Group.

8    On or about 27 November 2017, NGS Group began offering in Australia a “blockchain mining package with minimum monthly returns” (the Blockchain Mining Product). Between 27 November 2017 and about 28 December 2023 (the relevant period), over 450 Australian investors invested a total of $58,910,118.30 in the Blockchain Mining Product. Of the 464 investors, 227 made investments in the Blockchain Mining Product through a self-managed superannuation fund (SMSF).

9    Since about November 2017, NGS Digital has been an authorised reseller of the Blockchain Mining Product in Australia. NGS Digital facilitated the sale of the Blockchain Mining Product by holding Australian bank accounts for the receipt of investors’ funds and by leasing premises in Surfers Paradise, Gold Coast, Australia which were used by sales representatives of NGS Group and NGS Crypto.

10    Since about March 2018, NGS Crypto has been an authorised reseller of the Blockchain Mining Product in Australia for NGS Group. NGS Crypto was largely responsible for the marketing of the Blockchain Mining Product.

11    During the relevant period, the corporate defendants (to differing extents) promoted the Blockchain Mining Product to Australians through:

(a)    the NGS Group website: “ngsgroup.io”;

(b)    the NGS Crypto website: “ngscrypto.com”;

(c)    guides, booklets and information sheets;

(d)    the social media accounts of NGS Group and NGS Crypto;

(e)    emails from NGS Crypto; and

(f)    marketing by sales representatives.

(collectively, the Marketing Material).

12    The content of the Marketing Material included representations that, with respect to the Blockchain Mining Product:

(a)    annual returns were from 6% to 16%;

(b)    funds were invested over a fixed term (e.g., 3 or 5 year terms);

(c)    100% of an investor’s capital was returned at the end of the term;

(d)    it was akin to a term deposit;

(e)    revenue was generated through facilitating blockchain (or digital currency) mining;

(f)    the blockchain mining operation was carried out from a facility in Batam, Indonesia;

(g)    there was no speculation with an investor’s capital to buy, sell or trade digital assets (i.e., all funds were used for mining facilitation);

(h)    higher returns had been achieved than that with superannuation industry leaders over the past 5 years; and

(i)    investments could be made through a SMSF.

13    The Marketing Material invited persons to provide their contact details to allow them to be contacted about the Blockchain Mining Product. A person who provided their contact details would be contacted by a sales representative of NGS Group or NGS Crypto. The sales representative usually made representations to the effect that:

(a)    the Blockchain Mining Product generated better returns than other investment options, such as industry super funds, property, dividends or term deposits; and

(b)    there were benefits to investing in the Blockchain Mining Product through a SMSF, and that NGS Group or NGS Crypto (as the case was) could organise for the person to receive a call from a third-party company to discuss setting up a SMSF for that purpose.

14    Once a person had agreed to invest in the Blockchain Mining Product, they usually did so through the following process:

(a)    by accessing the ngscrypto.com website, either directly or with assistance from a sales representative;

(b)    on the ngscrypto.com website, selecting the type of Blockchain Mining Product the person wished to invest in, and clicking the “sign-up" button;

(c)    upon clicking the “sign-up" button, an “initial Mining Agreement” (Mining Investment Agreement)” was issued by NGS Group which recorded the parties’ obligations, the invested amount, the length of the investment, the specified coins to be mined under the Mining Investment Agreement, and earnings to be paid;

(d)    the Mining Investment Agreement was then sent to the prospective investor, or was available on the ngscrypto.com website, to be executed; and

(e)    the person paid the amount of their investment to NGS Group through digital currency via that persons cryptocurrency wallet, or via fiat currency paid into the bank account of NGS Digital.

15    Where a person had expressed an interest in investing in the Blockchain Mining Product through a SMSF, a sales representative arranged a “financial discovery call” between that person and a third-party company regarding setting up a SMSF. NGS Group had service agreements with the third-party companies used for the “financial discovery calls”. The third-party providers assisted investors to set up a SMSF and to roll over the investors existing superannuation accounts into the new SMSF. An agent or representative of NGS Group would then typically facilitate a transfer of the investment amount from the SMSF into either a bank account operated by NGS Digital or a cryptocurrency wallet in the name of the SMSF, and then to NGS Group. Where an investment was made through a SMSF, the Mining Investment Agreement was executed by the trustee for the SMSF.

Procedural Background

16    By its initial originating process filed 9 April 2024, ASIC sought relief including urgent ex parte restraint and freezing orders and the appointment of receivers pursuant to s 1323 of the Corporations Act 2001 (Cth). On 10 April 2024, Meagher J made orders (subsequently varied by Derrington J on 30 April 2024), which relevantly (as varied):

(a)    appointed Anthony Norman Connelly, Katherine Sozou and William James Harris (Receivers) as receivers over the digital currency assets held or controlled by the defendants (the Digital Currency Assets) for the purposes of identifying and securing them pursuant to ss 1323(1)(h) and (3) of the Corporations Act;

(b)    invested the Receivers with powers set out in ss 420(2)(a), (b), (e), (f), (g), (k), (n), (p), (q), (r) and (t) of the Corporations Act with respect to the Digital Currency Assets;

(c)    required the defendants to immediately (on service of the Orders) deliver up to the Receivers the Digital Currency Assets and all books, records and things which related to the Digital Currency Assets, including, but not limited to:

(i)    credentials and passwords for access to any Digital Currency Asset, including public and private access keys to any hot or cold wallet held or controlled by any of the defendants and any login details for any account held by or with any third-party exchange, platform or custodian in the name of, or for the benefit of the defendants;

(ii)    any and all authentication devices required to facilitate access, operation or control of any Digital Currency Asset;

(iii)    all relevant credentials and passwords for access to the authentication devices or systems, including emails, SMS or mobile apps, that facilitate access, operation of any Digital Currency Asset; and any hard wallet device containing or facilitating access to any Digital Currency Asset. Together with that device’s access code.

(d)    restrained the defendants from doing anything which would dissipate or alter the Digital Currency Assets, save as for certain exceptions; and

(e)    required each defendant to deliver to ASIC and the Receivers an affidavit detailing the details of any bank or other financial account in the name of that defendant, or under its control.

17    Following the making of those urgent Orders, the matter was docketed to me for progression to substantive resolution.

PRELIMINARY MATTERS

18    Before turning to the substantive relief sought by ASIC, it is necessary to deal with two preliminary matters.

19    First, it is useful to outline the position of the parties in relation to the relief sought by ASIC. As I noted earlier, NGS Crypto and NGS Group consent to the granting of the primary relief, and NGS Digital does not object to said relief. On 14 February 2025, NGS Crypto and Mendham filed an Amended Concise Statement in Response to ASIC’s ACS (1&4D ACSR). Also on 14 February 2025, NGS Group filed an Amended Concise Statement in Response to ASIC’s ACS (3D ACSR). In those responses, NGS Crypto and NGS Group make substantial admissions; however, they also deny or qualify certain claims of the ACS.

20    NGS Digital, Caten and Brown did not file responses to ASIC’s ACS (nor indeed ASIC’s original Concise Statement).

21    Despite the earlier denials or non-admissions of the defendants, the Court may treat their later consent (or non-objection) to particular relief as an admission of the facts necessary to allow the awarding of the relief sought against them. In Australian Competition and Consumer Commission v Mitolo Group Pty Ltd [2019] FCA 1257, Murphy J stated:

[35]    The Court is entitled to treat the respondents’ consent as an admission of all facts necessary or appropriate to the granting of the relief sought against it.

22    I note that in Mitolo, there were no parties who positively stated that they did not object, as opposed to consent, to the relief sought against them. However, there is no reason that a positive unconditional non-objection of a party to relief sought against it should be treated as implying some denial of the factual pre-requisites giving rise to the availability of that relief.

23    Notwithstanding the above, much of the relief sought by ASIC requires, by force of statute, the Court to reach a requisite level of satisfaction in order to grant said relief. Where that is so, I consider the evidence before the Court as the primary factor in evaluating whether I should grant the relief against a particular defendant.

24    Second, ASIC seeks a direction under s 50 of the Evidence Act 1995 (Cth) to adduce evidence of the Mining Investment Agreements in the form of a summary of those Agreements.

25    Section 50 of the Evidence Act provides that the Court may, on application of a party, direct that the party may adduce evidence of the contents of 2 or more documents in the form of a summary. The Court may make such a direction where it is satisfied that it would not otherwise be possible to conveniently examine the evidence because of the volume or complexity of the documents in question: Evidence Act s 50(1).

26    Section 50(2) of the Evidence Act provides that a direction under that section may only be made if the applying party served a copy of the summary on each other party and gave those parties a reasonable opportunity to examine or copy the documents. ASIC gave evidence that it served a copy of the summary on each of the defendants on 5 May 2025. No party objected to the summary being used.

27    There are hundreds of individual Mining Investment Agreements, including several distinct revisions (Agreements Type A – D), and no objections from the defendants to a summary being used. For those reasons, I am satisfied that ASIC should be directed to rely on the summary of the Mining Investment Agreements in adducing evidence of the individual Agreements. Such summary is to be in the form exhibited to the affidavit of Meredith Bennett of 10 July 2025 (the Mining Agreement Database).

CONSIDERATION

28    The relief sought by ASIC in its proposed orders, is:

(1)    four distinct declarations of contraventions of the Corporations Act, each against some or all of the corporate defendants;

(2)    injunctions against the corporate defendants;

(3)    orders for the winding up of two of the corporate defendants and the NGS Digital Mining Scheme (as that Scheme is defined in the Orders); and

(4)    for the orders made by Derrington J under s 1323 of the Corporations Act to continue, albeit with minor variations.

29    As I stated earlier, despite no party objecting to the preponderance of the relief sought by ASIC, I must still be satisfied that it is appropriate to grant such relief. Accordingly, I will consider each of the reliefs sought in turn.

(1) DECLARATIONS

30    ASIC primarily seeks declarations under s 1317E of the Corporations Act. Section 1317E(1) of the Corporations Act provides that:

(1)    If a Court is satisfied that a person has contravened a civil penalty provision, the Court must make a declaration of contravention.

31    It follows that if I am satisfied that a defendant has breached a civil penalty provision, I must make a declaration under s 1317E of the Corporations Act.

32    Relevantly, each of s 601ED(8), s 911A(5B) and s 911B(4) are “civil penalty provisions” for the purposes of s 1317E of the Corporations Act: Corporations Act s 1317E(3).

33    For the alleged breach of s 601CD of the Corporations Act, ASIC seeks a declaration under s 21 of the Federal Court of Australia Act 1976 (Cth) (FCA Act). Presumably, ASIC does not seek a declaration for breach of s 601CD under s 1317E of the Corporations Act, because s 601CD is not a civil penalty provision.

34    Section 21 of the FCA Act provides that:

(1)      The Court may, in civil proceedings in relation to a matter in which it has original jurisdiction, make binding declarations of right, whether or not any consequential relief is or could be claimed.

(2)      A suit is not open to objection on the ground that a declaratory order only is sought.

35    Pursuant to s 21 of the FCA Act, this Court plainly has the power to make a declaration of the kind sought by ASIC for the alleged breach of s 601CD of the Corporations Act. I will turn to whether such a declaration should be made, after considering whether s 601CD of the Corporations Act was breached by NGS Group.

Section 1317E Declaration for Breaches of s 911A

36    ASIC seeks a declaration under s 1317E of the Corporations Act for breaches of s 911A of the Corporations Act against all three of the corporate defendants.

37    Section 911A of the Corporations Act relevantly provides that:

(1)     Subject to this section, a person who carries on a financial services business in this jurisdiction must hold an Australian financial services licence covering the provision of the financial services.

Note 1: Also, a person must not provide a financial service contrary to a banning order or disqualification order under Division 8.

Note 2: Failure to comply with this subsection is an offence (see subsection 1311(1)).

…

(5B)     A person contravenes this subsection if a person contravenes subsection (1).

38    Subsections 911A(2)(a)-(h) of the Corporations Act contain a plethora of exemptions to the requirement to hold an Australian financial services licence (AFSL). In the interests of brevity, I have considered but not reproduced those exceptions in these reasons. For the avoidance of doubt, no party submitted that any of those exceptions applied in the instant proceeding.

39    To establish a contravention of s 911A of the Corporations Act, ASIC must establish that the defendants were carrying on a financial services business in Australia, and that while doing so, the defendants did not hold an AFSL or were not an authorised representative of an AFSL holder: Australian Securities and Investments Commission v Caddick & Anor [2021] FCA 1443.

40    Until 20 October 2023, a “financial services business” was defined in s 761A of the Corporations Act as “a business of providing financial services”. That definition was repealed by Schedule 2, Part 1, Item 289 of the Treasury Laws Amendment (2023 Law Improvement Package No. 1) Act 2023 (Cth).

41    The definition of a “financial services business” in s 761A of the Corporations Act was repealed because the legislature took a view that the definition did not add anything to the ordinary meaning of the term: Treasury Laws Amendment (2023 Law Improvement Package No. 1) Bill 2023, Explanatory Memorandum at [1.106].

42    Given the term “financial services business” is no longer defined by the Corporations Act, it now must be construed according to its ordinary meaning. That ordinary meaning, in the context of the Corporations Act, can be informed by some of the following definitions.

43    The term “financial services” is defined by s 766A(1)(a) and (b) of the Corporations Act to include “provid[ing] financial product advice” or “deal[ing] in a financial product”. The act of “dealing” in a financial product is defined by s 766C of the Corporations Act as:

(1)     The following conduct (whether engaged in as principal or agent) constitutes dealing in a financial product:

(a)     applying for or acquiring a financial product;

 (b)     issuing a financial product;

(c)     in relation to securities and interests in managed investment schemes—underwriting the securities or interests;

 (d)     varying a financial product;

 (e)     disposing of a financial product.

(2)     Arranging for a person to engage in conduct referred to in subsection (1) is also dealing in a financial product, unless the actions concerned amount to providing financial product advice.

…

(Emphasis in original).

44    The term financial product advice is defined by s 766B(1) of the Corporations Act to include providing a recommendation or statement of opinion, or a report of either of those things that is intended to influence a person in making a decision in relation to a particular financial product, or that could reasonably be regarded as being intended to have such an influence.

45    ASIC submits that for the purposes of this proceeding, the relevant financial products are:

(a)    the Blockchain Mining Product; and

(b)    interests in the SMSFs.

46    Following the definitions I set out above, the defendants will relevantly have been carrying on a financial services business if they were dealing in, arranging for other persons to deal in, or providing advice in relation to, a financial product. The first pertinent question for the Court in relation to the alleged breaches of s 911A is whether the Blockchain Mining Product or interests in the SMSFs were financial products.

Whether the Blockchain Mining Product is a financial product dealt with by the corporate defendants

47    ASIC sets out two bases on which it submits the Blockchain Mining Product is a financial product.

48    ASIC’s first basis is that the Blockchain Mining Product is an interest in an unregistered managed investment scheme. An interest in an unregistered managed investment scheme is a financial product pursuant to s 764A(1)(ba) of the Corporations Act. Section 9 of the Corporations Act defines a managed investment scheme as, relevantly:

(a)     a scheme that has the following features:

(i)    people contribute money or money’s worth as consideration to acquire rights (interests) to benefits produced by the scheme (whether the rights are actual, prospective or contingent and whether they are enforceable or not);

(ii)    any of the contributions are to be pooled, or used in a common enterprise, to produce financial benefits, or benefits consisting of rights or interests in property, for the people (the members) who hold interests in the scheme (whether as contributors to the scheme or as people who have acquired interests from holders);

(iii)     the members do not have day-to-day control over the operation of the scheme (whether or not they have the right to be consulted or to give directions); 

…

(Emphasis in original).

49    The definition provided by s 9 of the Corporations Act was helpfully summarised and explained in the following passages of Barrett J in Australian Securities and Investments Commission v Takaran Pty Ltd [2002] NSWSC 834:

[12]    The Act makes no attempt to define "scheme" for these purposes. It does, however, refer to the "features" of a "scheme" that make it a "managed investment scheme". Those "features" are, first, the act of contribution of money or money's worth by several persons; second, the accruing to those persons in return ("as consideration") of certain rights to benefits produced by the scheme; third, pooling of the contributions or other use of them in a common enterprise; fourth, an objective or expectation of accrual of benefits to persons for the time being holding the rights generated by contributions; and, fifth, absence of day-to-day control over the operation of the scheme by those persons. It is clear from the characteristics that a "scheme" must be capable of being identified within certain boundaries. Such identification is necessary to decide whether it has the characteristics which bring it within the statutory definition.

…

[15]    The essence of a "scheme" is a coherent and defined purpose, in the form of a "programme" or "plan of action", coupled with a series of steps or course of conduct to effectuate the purpose and pursue the programme or plan. In some cases, the scope of the scheme will readily be gathered from some constitutive document in the nature of a blueprint setting out all relevant matters. In others, there may be no writing or such as there is may tell only part of the story, leaving the remainder to be supplied by necessary implication from all the circumstances. Profit making will almost invariably be a feature or objective of the kind of scheme with which the s9 definition of "managed investment scheme" is concerned, given the definition's references in several places to "benefits". Whatever is incidental and necessary to the pursuit of the profit (or "benefits") will therefore be comprehended by the scheme, including, it seems to me, steps sensible to counter risk of loss (or detriment). Every cogent plan caters for - or, at least, recognises and takes into account - contingencies of an adverse kind.

[16]    It must also be emphasised that a scheme having the characteristics bringing it within the s9 definition of "managed investment scheme" will not necessarily possess those characteristics alone. In Royal Bank of Canada v Inland Revenue Commissioners [1972] Ch 665, Megarry J observed, in relation to the concept of "ordinary banking business", that "a statement of the essentials of a business does not seem to me, without more, to be exhaustive of all that is ordinary in that business". A managed investment scheme, like a banking business, may involve elements beyond the core attributes that give it its essential character. Elements which lie beyond those attributes but contribute to the coherence and completeness which make a "programme" or "plan of action" must form part of that "scheme". Every programme or plan of action must be taken to include the logical incidents of and consequences of and sequels to its acknowledged components.

50    I gratefully adopt the reasoning of his Honour in Takaran, as well as that of Megarry J in Royal Bank of Canada v Inland Revenue Commissioners [1972] Ch 665.

51    In line with my adoption of principles explained in Takaran and Bank of Canada, a managed investment scheme must possess at least three fixed characteristics (although it may possess far more). Those mandatory characteristics are:

(1)    contribution of money as consideration to acquire rights;

(2)    pooling of the contributions; and

(3)    no day-to-day control of the operation by contributors.

52    In ASIC’s submission, the Blockchain Mining Product’s “defined purpose” was:

… to generate profits from the digital asset mining operations of NGS Group by raising capital from investors purportedly to finance expansion of the capacity of those operations. The ostensible steps to implement the plan were to offer investors rights to a share of those profits through Mining Agreements, collect the contributions from those investors and use those funds for the acquisition of digital asset mining equipment.

53    NGS Group admitted that the three defining characteristics of a managed investment scheme were possessed by the NGS Digital Mining Scheme: 3D ACSR at [13].

54    NGS Crypto admitted that the NGS Digital Mining Scheme had the characteristic of contribution: 1&4D ACSR at [11(a)]. In relation to the pooling characteristic, NGS Crypto did not admit nor deny ASIC’s allegation; rather, it pleaded that NGS Group told NGS Crypto that members’ funds were not pooled and therefore NGS Crypto believed that funds were not pooled: 1&4D ACSR at [11](b)-(f). NGS Crypto further did not clearly admit nor deny the control characteristic. Instead, it submitted that the members had such rights as were agreed in the Mining Investment Agreement and that they could access their funds: 1&4D ACSR at [11](g)-(i). NGS Crypto subsequently denied that it was a managed investment scheme: 1&4D ACSR at [11](j).

55    ASIC submits that NGS Crypto’s response in relation to the pooling and control characteristics should constitute implied admissions as to those characteristics. ASIC further submits that NGS Crypto’s ultimate denial of being a managed investment scheme is not gainsaid by its admissions and implied admissions as to the specific characteristics.

56    I have already noted that NGS Digital did not respond to any of ASIC’s allegations.

57    I do not propose to traverse the presence or any subsequent impact of any “implied admission” by any of the defendants in this matter. ASIC has presented a substantial body of evidence in support of its case for consideration by the Court, and it is that evidence on which I have relied in reaching my decision where there is a dispute between the parties as to relevant factual or legal matters.

58    I am satisfied that the Blockchain Mining Product constitutes a managed investment scheme for the reasons that follow.

59    First, I note that both NGS Group and NGS Digital admit that the contribution characteristic is satisfied. Clause 2(a) of Agreement Type D states:

(a)     You must deposit the Investment Amount with us using either Bitcoin or Fiat currency, using the details set out in the Schedule at the end of this Agreement. The notes to the payment methods in the Schedule form part of this Agreement.

60    Clauses 2(b), (d) and (f) demonstrate that the intention of the contribution by the investor was to provide a financial return or other benefit for the investor where they state:

(b)     We will apply Your Investment towards mining the Specified Coins. We will do this by applying Your Investment towards the acquisition of mining hardware and related matters.

…

(d)     Starting from the Commencement Date, we will credit your NGS Wallet with Your Earnings for each day as soon as practicable after the end of that day. We will continue to do so until the Expiry Date or until this Agreement is otherwise validly terminated.

…

(f)     Your Minimum Monthly Earnings in any calendar month, will be equal to the sum of the aggregated daily market value of Bitcoin to USD. These returns can remain in Bitcoin (per Item 6), but you understand that by doing this, you are taking a speculative position and therefore your aggregated returns will be exposed to market price fluctuations. The valuation of your aggregated returns could therefore increase but could also fall in value. To mitigate this risk, returns should be converted to USD.

…

61    Plainly, these clauses demonstrate that the Bitcoin Mining Product had the contribution characteristic, as investors entered the Mining Investment Agreement with the intention of receiving “Minimum Monthly Earnings”. The Blockchain Mining Product was not one where the intention of investors to receive benefits could be attended by doubt: cf. Australian Securities and Investments Commission v M101 Nominees Pty Ltd (in liq) [2025] FCA 741 at [417] to [441]

62    Second, I am satisfied that the contributions were to be pooled, or used in a common enterprise. So much is clear from clause 6.1(f) of Agreement Type D which states:

You acknowledge that:

…

(f)     while we will apply Your Investment towards creating Your Earnings, the Investment Amount:

(a)     will be intermingled with other monies;

(b)     will not be held on trust for you or any other person;

…

63    The promotional materials used by the corporate defendants also demonstrate the pooling characteristic: Affidavit of Peter James Connor of 7 March 2025 at [17], [18]-[28]; Affidavit of Sarah Sharp of 28 April 2025 at Table 1.

64    Third, I am satisfied that investors did not have day-to-day control of the Blockchain Mining Product. That this is so is clear from the following clauses of Agreement Type D:

2.     Overview of key terms

…

(b)     We will apply Your Investment towards mining the Specified Coins. We will do this by applying Your Investment towards the acquisition of mining hardware and related matters.

(c)     We will decide how much we apply towards any given Specified Coin at any given time. You authorise us to use Your Investment in this way.

…

3.1     Our right to vary mining

(a)     You acknowledge that information relating to our mining strategy and methods (including matters such as which Coins we mine at any given time and the manner, method or time at which we do so) is our confidential information and is commercially sensitive.

(b)     Subject to clause 3.1(c), we may at any time and at our sole discretion change the Coins being mined using Your Investment, or alter the proportion of our resources dedicated to mining any particular Coin. If we do so, we may inform you of the changes we have made after the fact (but we are not required to do so).

(c)     Despite clause 3.1(b) and anything else in this Agreement, we will only apply Your Investment towards mining the Specified Coins (unless you expressly authorise us to mine other coins).

…

65    Previous revisions of the Mining Investment Agreement contained analogous clauses to each of those I have outlined, each with the same characteristics.

66    It follows that the Blockchain Mining Product was a managed investment scheme.

67    A managed investment scheme is required to be registered under s 601EB if, relevantly, it has more than 20 members: Corporations Act s 601ED. ASIC submits that the date from which the Blockchain Mining Product had more than 20 members was 27 February 2018 (and at all material times after that date). The Mining Agreement Database demonstrates that by 27 February 2018, 23 Mining Investment Agreements had been entered into: Mining Agreement Database at Table B-2. At no point in time after 27 February 2018, did the number of investors in the investment scheme fall to below 20 (before the commencement of these proceedings). Therefore, I am satisfied that the Blockchain Mining Product was required to be registered from 27 February 2018.

68    ASIC’s evidence demonstrates that the Blockchain Mining Product was never registered as a managed investment scheme: Affidavit of Peter James Connor of 7 March 2025 at [30]-[31], [42].

69    Given that I am satisfied that the Blockchain Mining Product was an interest in an unregistered managed investment scheme, it was a financial product for the purposes of s 764A(1)(ba) of the Corporations Act.

70    The next question is whether the financial product was “issued” for the purposes of determining whether the financial product was “dealt” with for the purposes of s 766C of the Corporations Act. Section 761E(2) provides that:

(2)     Subject to this section, a financial product is issued to a person when it is first issued, granted or otherwise made available to the person.

71    The Blockchain Mining Product was issued, or made available, to investors at the time each investor entered into the relevant Mining Agreement. That Mining Agreement is the facility which constitutes the product, for the purposes of that person’s investment. This interpretation is analogous to an event that causes similar financial products to be issued: Corporations Act s 761E(3).

72    Accordingly, NGS Group dealt with a financial product for the purposes of s 766A(1)(b) each time a Mining Agreement was entered into. NGS Crypto and NGS Digital dealt with the financial product by arranging the financial products to be issued: Corporations Act s 766C(2).

73    ASIC further submitted that the Blockchain Mining Product was a financial product because it was a facility through which a person makes a financial investment: Corporations Act ss 763A(1)(a) and 763B. However, given the conclusions I have reached above, it is unnecessary to consider this submission.

Whether an interest in a SMSF is a financial product dealt with by the corporate defendants

74    ASIC also submits that a beneficial interest in a SMSF is a financial product. A superannuation product is specified as being a financial product under s 764A(1)(g) of the Corporations Act. A superannuation product is defined by s 9 of the Corporations Act as:

… a superannuation interest within the meaning of the Superannuation Industry (Supervision) Act 1993 (Cth).

75    Section 10(1) of the Superannuation Industry (Supervision) Act 1993 (Cth) (SIS Act) states that a “superannuation interest means a beneficial interest in a superannuation entity”. A “superannuation entity” includes a “regulated superannuation fund”: SIS Act s 10(1). A regulated superannuation fund is a fund that complies with the requirements of s 19 of the SIS Act.

76    A SMSF is not a fund that prima facie meets the requirements of s 19 of the SIS Act. However, in practice, a SMSF must be a regulated superannuation fund because in order for a fund to be entitled to taxation concessions under the Income Tax Assessment Act 1997 (Cth), it must be a “complying superannuation fund” within the meaning of s 45 of the SIS Act. In order for a SMSF to be a complying superannuation fund, it must be a regulated superannuation fund: SIS Act s 42A.

77    Several Courts have previously considered whether a SMSF is a regulated superannuation fund, and, in turn, a financial product for the purposes of the Corporations Act. In Australian Securities and Investments Commission v Monarch FX Group Pty Ltd [2014] FCA 1387, Gordon J found that:

[83]    … Monarch FX provided advice in relation to establishing a SMSF and rolling in funds held elsewhere. The clients’ superannuation interests were financial products within the operation of s 764A(1)(g) of the Corporations Act: see [13] above. Monarch FX therefore provided financial product advice for the purpose of s 766B of the Corporations Act, as it made recommendations that could reasonably be regarded as being intended to influence clients making a decision about their superannuation interest.

78    In Australian Securities and Investments Commission v ActiveSuper Pty Ltd (in liq) [2015] FCA 342, White J held that the following conduct was a contravention of s 911A(1) of the Corporations Act:

[319]    …Royale by its telemarketers and Mr Gibson himself made recommendations or statements of opinions intended to influence persons to establish their own SMSF. In his conversations with those persons who expressed interest, Mr Gibson made arrangements for them to acquire a superannuation interest and later facilitated that acquisition. He also arranged for those persons whoa greed to establish an SMSF to establish a Macquarie Account. The very business of Royale involved the marketing and establishment of SMSFs and the making of investments by SMSF investors…

79    Analogous conclusions to those in Monarch and ActiveSuper were also reached in Australian Securities and Investments Commission v Park Trent Properties Group Pty Ltd (No 3) [2015] NSWSC 1527 and Re PFS Wholesale Mortgage Corporation Pty Ltd; Australian Securities and Investments Commission v PFS Business Development Group Pty Ltd [2006] VSC 192.

80    I respectfully agree with and adopt the conclusions reached in those authorities outlined. I am satisfied that a SMSF is a financial product for the purposes of s 764A(1)(g) of the Corporations Act.

81    A superannuation product is taken to be issued as soon as “the person becomes a member of the fund concerned”: Corporations Act s 761E(3). Accordingly, by operation of s 766C(2) of the Corporations Act, arranging for SMSFs to be issued to investors, constitutes dealing with a financial product for the purposes of s 766A(1)(b) of the Corporations Act.

Whether the corporate defendants carried on a financial services business in contravention of s 911A of the Corporations Act

82    Having established that the issuing, or arranging for the issuing, of the Blockchain Mining Product and interests in the SMSFs would constitute dealing in a financial product, the next question is whether the actions of the corporate defendants    constituted carrying on a financial services business without an AFSL.

83    A corporation engaged in activities in the hope or with the expectation of profit is presumed to be carrying on a business: Inland Revenue Commissioners v Westleigh Estates Company Ltd [1924] 1 KB 390; American Leaf Blending Co Sdn Bhd v Director-General of Inland Revenue (1979) AC 676.

84    For the purposes of the Corporations Act, the pursuit of profit is not a necessary prerequisite to be considered a business: Corporations Act s 18. A business may also be carried on alone or together with any other persons: Corporations Act s 20.

85    ASIC submits that although the corporate defendants are not related companies, they operated in a coordinated manner towards the marketing and distribution of the Digital Mining Product. ASIC submits that NGS Group was the originator and issuer of the product; NGS Crypto was engaged in the marketing and distribution of the Blockchain mining product as a contracted agent of NGS Group for the sale of the product; and NGS Digital was engaged in providing services and support, but was also a contracted agent of the NGS Group for the sale of the product.

Whether NGS Croup carried on a financial services business in Australia without an AFSL

86    In relation to NGS Group, ASIC alleged that NGS Group:

(1)    provided the financial services of:

(a)    issuing a financial product, being the Blockchain Mining Product;

(b)    arranging for persons to apply or acquire a financial product, being interests in SMSFs; and

(c)    providing financial product advice through the NGS Crypto website and other promotional materials,

(2)    provided the services in the course of, or for the purposes of, carrying on a business;

(3)    by its activities in or in relation to Australia, either carried on that business in Australia or is taken by s 911D of the Corporations Act to have done so; and

(4)    never held an AFSL.

87    NGS Group admitted all of these allegations. NGS Group’s demur was that it disputed that the proper law of some of the Mining Investment Agreements was determined solely by the governing law clause of those Mining Investment Agreements. That issue is irrelevant to the present proceedings before the Court.

88    The “issuer” of a financial product is the person responsible to the client for the obligations owed under the terms of the facility that is the product: Corporations Act s 716E(4). NGS Group was the person responsible for the obligations owed under the Mining Investment Agreements as it was the other party to those Mining Investment Agreements, along with the relevant investor. It follows that NGS Group issued the Blockchain Mining Product.

89    At [17] of the ACSR 3D, NGS Group admitted that it facilitated the establishment of SMSFs for potential investors. So much is also clear from the evidence of ASIC referable to the facts I previously outlined regarding “financial discovery calls” and the processes associated with attracting new investors. As I have previously explained, arranging for a financial product to be issued constitutes dealing with that product: Corporations Act s 766C(2). Accordingly, NGS Group “dealt with” interests in SMSFs.

90    Given the findings I have made, it is clear that NGS Group dealt with financial products for the purposes of s 766A(1)(b) of the Corporations Act. Consequently, NGS Group provided financial services.

91    ASIC further contends that NGS Group provided financial product advice about both the Blockchain Mining Product and interests in the SMSFs within the meaning of s 766B(1) of the Corporations Act. Financial product advice is defined by s 766B(1) of the Corporations Act as:

(1)     Financial product advice means a recommendation or a statement of opinion, or a report of either of those things, that:

(a)     is intended to influence a person or persons in making a decision in relation to a particular financial product or class of financial products, or an interest in a particular financial product or class of financial products; or

(b)     could reasonably be regarded as being intended to have such an influence.

(Emphasis in original.)

92    I am satisfied that the contents of the Marketing Material were intended to influence persons to make a decision to invest in the Blockchain Mining Product, and potentially to encourage such investment through the establishment of a SMSF. The content of the Marketing Material is clearly aimed at influencing readers to invest in the NGS Digital Mining Scheme, through a SMSF or otherwise. It follows that NGS Group provided financial product advice within the meaning of s 766B(1) of the Corporations Act.

93    In seeking to establish that NGS Group operated a business in Australia, ASIC relies on the following submissions in support:

(1)    the Mining Investment Agreements contain a clause that they are governed by the laws of Victoria or Australia;

(2)    NGS Group engaged NGS Crypto and NGS Digital to promote the Blockchain Mining Product to persons in Australia;

(3)    NGS Group engaged sales representatives based in Australia who operated from a premises located on the Gold Coast, Australia;

(4)    NGS Group arranged the establishment of SMSFs for investors by other persons who are based in Australia; and

(5)    NGS Group engaged in conduct which was intended to induce people in Australia to use the financial services provided by NGS Group, or was likely to have that effect.

94    NGS Group admitted to these allegations. On the evidence before the Court, the predominant purpose of NGS Group’s operations in Australia was to induce Australians to enter Mining Investment Agreements. Its conduct in doing so was repetitive and extended, and was for a commercial purpose, being the purpose of deriving income: Australian Securities and Investments Commission v Secure Investments Pty Ltd [2020] FCA 1463 at [68]. Despite there being no evidence of NGS Group’s motive in these operations, I infer that its motive was to gain profit from entering those Mining Investment Agreements.

95    It is plain that NGS Group carried on a financial services business in Australia.

96    It is not in dispute that NGS Group never held an AFSL: Affidavit of Peter James Connor of 7 March 2025 at [41].

97    As NGS Group carried on a financial services business in Australia without an AFSL, it contravened s 911A(1) of the Corporations Act. Thereby, NGS Group also contravened s 911A(5B) of the Corporations Act. I am satisfied that the declaration sought by ASIC under s 1317E must be made.

Whether NGS Crypto carried on a financial services business in Australia without an AFSL

98    ASIC alleged that NGS Crypto carried on a financial services business in Australia because NGS Crypto:

(1)    was a reseller of the Blockchain Mining Product and its website “ngscrypto.com” was used to sign-up investors, arrange for investors to apply or acquire, or for NGS Group to issue, the Blockchain Mining Product; or

(2)    alternatively, facilitated the setting-up of SMSFs in connecting investors with third-party companies – thereby arranging for persons to apply for or acquire a beneficial interest in a SMSF.

99    NGS Crypto pleaded that it was not a reseller of the Blockchain Mining Product and was “primarily responsible” for the “advertising, consulting about advertising, or making a referral” referable to the Blockchain Mining Product. NGS Crypto pleaded that those services did not constitute arranging for investors to apply or acquire a financial product, or dealing with, facilitating or providing a financial service.

100    Contrary to NGS Crypto’s pleadings, NGS Group pleaded that NGS Crypto was an authorised reseller of the Blockchain Mining Product; promoted the Blockchain Mining Product on its website; and a person invested in the Blockchain Mining Product through the ngscrypto.com website.

101    The evidence of ASIC demonstrates that in or about March 2018, NGS Group and NGS Crypto entered into an agreement dated 3 February 2018 named “Sales Agency Agreement” through which NGS Crypto was appointed to promote and solicit investments in the Blockchain Mining Product in Australia: Affidavit of Peter James Connor of 9 April 2024, Exhibit PJC-1, Tab 33.

102    ASIC has also furnished evidence that NGS Group and NGS Crypto entered a “Reseller Commission Agreement” on about 6 September 2019 whereby NGS Crypto was appointed the agent of NGS Group to promote and negotiate contracts for the Blockchain Mining Product: Affidavit of Peter James Connor of 9 April 2024, Exhibit PJC-1, Tab 34.

103    Further, ASIC’s evidence was that the ngscrypto.com website contained statements such as:

(1)    “NGS Crypto is an Australian-Owned and operated Blockchain Mining Company, currently based in QLD, Australia”;

(2)    “With hundreds of Members internationally, and a proven track record of never paying out a member less than their advertised return over the past 5 years, we’ve established ourselves as one of Australia’s leaders in the space.”;

(3)    “Invest with us”;

(4)    “Sign Up”;

(5)    “Sign Up Direct”

(6)    “Get started”; and

(7)    “Call now”.

(See Affidavit of Peter James Connor of 7 March 2025, Exhibit PJC-6, Tab 4, Pages 680 – 930.)

104    In Australian Securities and Investments Commission v Stone Assets Management Pty Ltd [2012] FCA 630 at [22], Besanko J found that the facilitation of access to a platform through which investments could be made, which in turn allowed a client to acquire a financial product, was sufficient to constitute conduct within s 766C(2) of the Corporations Act. Justice Besanko went on to accept that such facilitation was a provision of a financial service for the purposes of s 766A(1) of the Corporations Act. The conclusion in Stone Assets was adopted by White J in ActiveSuper at [339].

105    I respectfully concur with the conclusions reached in Stone Assets and ActiveSuper. NGS Crypto, in promoting and facilitating entry into Mining Investment Agreements, was providing a financial service within the meaning of s 766A(1)(b) of the Corporations Act. I have made this finding independent of inferences to be drawn from the Sales Agency Agreement and Reseller Commission Agreement, which of course also support the conclusion I have reached.

106    NGS Crypto also encouraged potential investors to acquire the Blockchain Mining Product through a SMSF: see, e.g., Affidavit of Peter James Connor of 7 March 2025, Exhibit PJC-6, Tabs 17, 19 and 20. NGS Crypto admitted that when a potential investor expressed interest in investing through a SMSF, NGS Crypto made a referral to a third party provider: 1&4D ACSR at [9](d). Again adopting the conclusions of their Honours in Stone Assets and ActiveSuper, I am satisfied that NGS Crypto provided a financial service referrable to interests in SMSFs within the meaning of s 766A(1)(b) of the Corporations Act.

107    ASIC further alleged that NGS Crypto provided financial product advice referable to the Blockchain Mining Product and interests in SMSFs within the meaning of s 766B(1) of the Corporations Act.

108    The Marketing Material clearly contained recommendations or statements intended to influence persons to make decisions in relation to the Blockchain Mining Product. For example, material on the ngscrypto.com website stated:

(1)    “Three reasons to invest with NGS Group. 1. Earn up to 16% a year. 2. Fixed rate Returns. 3. We return your capital.”;

(2)    “Subscribe through a SMSF. Earn Up to 16% p.a. Through a Self-Managed Super Fund”; and

(3)    “NGS Crypto is one of the leading digital asset mining companies in Australia offering our members minimum fixed rate returns between 6-16% through bitcoin and multi-crypto mining, We take the hassle out of digital asset mining allowing you to quickly get started and diversify your investment portfolio.”

(See Affidavit of Peter James Connor of 7 March 2025, Pages 146, 151 and 200.)

109    I am satisfied that NGS Crypto provided financial product advice within the meaning of s 766B(1) of the Corporations Act about both the Blockchain Mining Product and interests in SMSFs.

110    NGS Crypto is a company registered in Australia. Plainly, promoting and facilitating entry into Mining Investment Agreements was at the core of its operations – so much is clear from the ngscrypto.com website. Accordingly, NGS Crypto carried on a financial services business in Australia.

111    Again, ASIC’s undisputed evidence makes clear that NGS Crypto never held an AFSL: Affidavit of Peter James Connor of 7 March 2025 at [37].

112    As I found in relation to NGS Group, NGS Crypto carried on a financial services business in Australia without an AFSL, and it contravened s 911A of the Corporations Act. Thereby, NGS Crypto also contravened s 911A(5B) of the Corporations Act. I am thus satisfied that the declaration sought by ASIC under s 1317E must be made.

Whether NGS Digital carried on a financial services business in Australia without an AFSL

113    ASIC alleges that NGS Digital carried on a financial services business in Australia because NGS Digital:

(1)    was a reseller of the Blockchain Mining Product in Australia;

(2)    received investor funds into bank accounts controlled by it;

(3)    leased premises in Surfers Paradise, Queensland used by sales representatives of NGS Group and NGS Crypto;

(4)    arranged for investors to apply for or acquire the Blockchain Mining Product.

114    NGS Digital and NGS Group entered an agreement entitled “Sales Agency Agreement” dated 2 November 2017 whereby NGS Digital was appointed to promote and solicit investments in the Blockchain Mining Product in Australia: Affidavit of Peter James Connor of 9 April 2024, Exhibit PJC-1, Tab 32.

115    NGS Digital and NGS Group also entered into an agreement entitled “Reseller Commission Agreement” on or about 6 September 2019, under which NGS Digital was appointed the agent of NGS Group to promote and negotiate contracts for the Bitcoin Mining Product in Australia: Affidavit of Peter James Connor of 9 April 2024, Exhibit PJC-2, Tab 34.

116    For the reasons I explained in relation to NGS Crypto, and with reference to the same authorities, the conduct of NGS Digital in facilitating the Blockchain Mining Product and interests in SMSFs constituted provision of a financial service for the purposes of s 766A(1)(b) of the Corporations Act.

117    I am also satisfied, for the same reasons I set out earlier in relation to NGS Crypto, that NGS Digital carried on a financial services business in Australia.

118    It is not in dispute that NGS Digital never held an AFSL: Affidavit of Peter James Connor of 7 March 2025 at [39].

119    I am satisfied that NGS Digital carried on a financial services business in Australia without an AFSL and contravened s 911A(1) (and thus, s 911A(5B)) of the Corporations Act. Given this finding, I am satisfied that I must make the declaration sought by ASIC under s 1317E of the Corporations Act.

Section 1317E Declaration for Breaches of s 911B

120    ASIC seeks a declaration under s 1317E of the Corporations Act for breaches of s 911B of the Corporations Act against NGS Crypto and NGS Digital.

121    Section 911B of the Corporations Act relevantly provides that:

(1)     A person (the provider) must only provide a financial service in this jurisdiction on behalf of another person (the principal) who carries on a financial services business if one or more of the following paragraphs apply:

…

(4)     A person contravenes this subsection if the person contravenes subsection (1).

Note: This subsection is a civil penalty provision (see section 1317E).

122    Relevantly, the effect of s 911B of the Corporations Act is that a person who does not hold an AFSL may only provide financial services on behalf of another person if that other person holds an AFSL.

123    ASIC alleges that NGS Crypto and NGS Digital provided financial services on behalf of NGS Group in circumstances where NGS Group did not hold an AFSL.

124    Given I have previously found that NGS Crypto and NGS Digital carried on a financial services business in Australia, and that none of the corporate defendants ever held an AFSL, the only issue for determination in this respect is whether NGS Crypto and NGS Digital carried on their businesses on behalf of NGS Group.

125    As I explained earlier in these reasons, both NGS Crypto and NGS Digital entered into a “Sales Agency Agreement” and “Reseller Commission Agreement” with NGS Group. Further, each Mining Investment Agreement that was facilitated by NGS Crypto or NGS Digital, was ultimately executed by the investor and NGS Group. NGS Group was accordingly the ultimate issuer of the Blockchain Mining Product.

126    NGS Crypto’s role in advertising and facilitating the Blockchain Mining Product and interests in SMSFs was on behalf of NGS Group, in circumstances where NGS Crypto’s compensation for that advertisement and facilitation was commission and fees under its agreements with NGS Group. Accordingly, I am satisfied that NGS Crypto contravened s 911B(1) (and thus s 911B(4)) of the Corporations Act.

127    For the same reasons I set out earlier in relation to NGS Crypto, NGS Digital’s role in controlling bank accounts and leasing premises to facilitate the entering of the Blockchain Mining Product and interests in SMSFs was also on behalf of NGS Group. I am satisfied that NGS Digital contravened s 911B(1) and therefore s 911B(4) of the Corporations Act.

128    Given that I am satisfied that NGS Crypto and NGS Digital contravened s 911B(4) of the Corporations Act, I must make the declaration sought by ASIC under s 1317 of the Corporations Act.

Section 1317E Declaration for Breaches of s 601ED(5)

129    ASIC seeks a declaration under s 1317E of the Corporations Act for a breach of s 601ED(5) of the Corporations Act against NGS Group.

130    Section 601ED of the Corporations Act relevantly provides that:

(1)     Subject to subsections (2) and (2A), a managed investment scheme must be registered under section 601EB if:

(a)     it has more than 20 members; or

(b)    it was promoted by a person, or an associate of a person, who was, when the scheme was promoted, in the business of promoting managed investment schemes; or

(c)     a determination under subsection (3) is in force in relation to the scheme and the total number of members of all of the schemes to which the determination relates exceeds 20.

(2)     A managed investment scheme does not have to be registered if all the issues of interests in the scheme that have been made would not have required the giving of a Product Disclosure Statement under Division 2 of Part 7.9 if the scheme had been registered when the issues were made.

(2A)     A notified foreign passport fund does not have to be registered.

…

(5)     A person must not operate in this jurisdiction a managed investment scheme that this section requires to be registered under section 601EB unless the scheme is so registered.

Note: Failure to comply with this subsection is an offence: see subsection 1311(1).

…

(8)     A person contravenes this subsection if the person contravenes subsection (5).

Note: This subsection is a civil penalty provision (see section 1317E).

131    Essentially, s 601ED prohibits a person from carrying on a managed investment scheme that is not registered, where that scheme is required to be registered under s 601EB of the Corporations Act.

132    I have already determined that the Blockchain Mining Product was a managed investment scheme operated in Australia by NGS Group which, from 27 February 2018, had more than 20 members. I have also already found that the Blockchain Mining Product was never registered under s 601EB of the Corporations Act.

133    Given those previous findings, I am satisfied that NGS Group breached s 601ED(5) and consequently s 601ED(8) of the Corporations Act. I must therefore make the declaration sought by ASIC under s 1317E of the Corporations Act.

Section 21 Declaration for Breaches of s 601CD

134    ASIC seeks a declaration under s 21 of the FCA Act for a breach of s 601CD of the Corporations Act against NGS Group.

135    Section 601CD of the Corporations Act provides that:

(1)     A foreign company must not carry on business in this jurisdiction unless:

(a)     it is registered under this Division; or

(b)     it has applied to be so registered and the application has not been dealt with.

(2)     For the purposes of this Division, a foreign company carries on business in this jurisdiction if it:

 (a)     offers debentures in this jurisdiction; or

 (b)     is a guarantor body for debentures offered in this jurisdiction;

and Part 2L.1 applies to the debentures.

136    It is not in dispute that NGS Group was a foreign company as defined by s 9 of the Corporations Act: 3D ASCR at [25H(a)]. I have already found that NGS Group carried on a business in Australia. It follows that NGS Group was required to be registered under Division 2 of Part 5B.2 of the Corporations Act.

137    The undisputed evidence of ASIC demonstrates that searches of ASIC’s Connect Portal show NGS Group is not and has never been registered as a foreign company in Australia: Affidavit of Peter James Connor dated 7 March 2025 at [32] to [33]. In the absence of evidence to the contrary, I am satisfied that NGS Group was never registered as a foreign company, as it was required to be pursuant to s 601CD of the Corporations Act.

138    As Beach J observed in Australian Securities and Investments Commission v Mitchell (No 3) [2020] FCA 1604:

[7]    Now as to declaratory relief, I have an almost unlimited discretionary power to make declarations under s 21 of the Federal Court of Australia Act 1976 (Cth), which “[i]t is neither possible nor desirable to fetter … by laying down rules as to the manner of its exercise” (Forster v Jododex Australia Pty Ltd (1972) 127 CLR 421 at 437 per Gibbs J). But it is confined by considerations which mark out the boundaries of judicial power.

139    (See also Beach J in Australian Securities and Investments Commission v Hopkins [2024] FCA 1371 at [82]).

140    The preconditions for the giving of declaratory relief by the Court are threefold: See Forster v Jododex Australia Pty Ltd (1972) 127 CLR 421 at 437-438 and Ainsworth v Criminal Justice Commission (1992) 175 CLR 564 at 581-582:

(1)    There must be a real, not hypothetical question.

(2)    The applicant must have a real interest in raising the question before the Court.

(3)    There must be a proper contradictor and real consequences.

141    See also Derrington J in Australian Energy Regulator v Callide Power Trading Pty Ltd [2025] FCA 32 at [76].

142    I am satisfied that the preconditions for granting the declaration sought have been met in this case for the following reasons.

143    First, there is a real question as to whether NGS Group contravened s 601CD of the Corporations Act.

144    Second, ASIC, as a statutory national regulator, has an obvious interest in raising a question before the Court as to an unregistered foreign business operating within the jurisdiction contrary to the Corporations Act.

145    Third, NGS Group has an interest in opposing the relief as the party subject to the declaration. NGS Group’s interest in opposing the relief is not fettered by its current consent to the relief sought against it: Australian Competition and Consumer Commission v MSY Technology Pty Ltd [2012] FCAFC 56 at [30] to [33].

146    It is trite law that declarations which set out particular liability found by the Court have utility: See, e.g., Australian Securities and Investments Commission v Axis International Management Pty Ltd [2009] FCA 852 at [26] to [43]; Rural Press Limited v ACCC (2003) 216 CLR 53 at 95; Australian Softwood Forests Pty Ltd v Attorney-General (NSW); Ex Relatione Corporate Affairs Commission (1981) 148 CLR 121 at 125; Tobacco Institute of Australia Ltd v Australian Federation of Consumer Organisations Inc (No 2) (1993) 41 FCR 89; Stuart v Construction Forestry Mining and Energy Union [2010] FCAFC 65.

147    In the instant case, I am satisfied that there is utility in the declaration sought because it is crucial to the work of ASIC and other regulators that the Court records disapproval of conduct which contravenes legislation. These types of declarations also assist in mitigating harm to consumers and assist ASIC to carry out its duties under the Australian Securities and Investments Commission Act 2001 (Cth) and the Corporations Act. Such assistance to ASIC is provided by clarifying the law not only for ASIC, but also for the Australian public.

148    For these reasons, I am satisfied that the declaration sought against NGS Group for a breach of s 601CD of the Corporations Act should be made.

(2) INJUNCTIONS

149    ASIC seeks injunctions against all of the corporate defendants under ss 1101B and 1324 of the Corporations Act.

150    Section 1101B of the Corporations Act relevantly provides that:

(1)     The Court may make such order, or orders, as it thinks fit if:

(a)     on the application of ASIC, it appears to the Court that a person:

(i)     has contravened a provision of this Chapter, or any other law relating to dealing in financial products or providing financial services; or

(ii)     has contravened a condition of an Australian market licence, Australian CS facility licence, Australian derivative trade repository licence or Australian financial services licence; or

(iii)     has contravened a provision of the operating rules, or the compensation rules (if any), of a licensed market; or

(v)     has contravened a condition on an exemption from the requirement to hold an Australian market licence or an Australian CS facility licence; or

(vi)     is about to do an act with respect to dealing in financial products or providing a financial service that, if done, would be such a contravention; or

…

151    Section 1324 of the Corporations Act relevantly provides that:

(1)     Where a person has engaged, is engaging or is proposing to engage in conduct that constituted, constitutes or would constitute:

 (a)     a contravention of this Act; or

(b)     attempting to contravene this Act; or

(c)     aiding, abetting, counselling or procuring a person to contravene this Act; or

(d)     inducing or attempting to induce, whether by threats, promises or otherwise, a person to contravene this Act; or

(e)     being in any way, directly or indirectly, knowingly concerned in, or party to, the contravention by a person of this Act; or

 (f)     conspiring with others to contravene this Act;

the Court may, on the application of ASIC, or of a person whose interests have been, are or would be affected by the conduct, grant an injunction, on such terms as the Court thinks appropriate, restraining the first-mentioned person from engaging in the conduct and, if in the opinion of the Court it is desirable to do so, requiring that person to do any act or thing.

    …

152    Section 1101B forms part of Chapter 7 of the Corporations Act. I have found that each of the corporate defendants contravened s 911A(1) of the Corporations Act. The Court’s power to make an order under s 1101B is accordingly enlivened pursuant to s 1101B(1)(a)(i) of the Corporations Act. Any breach of the Corporations Act enlivens the Court’s power to make an order under s 1324.

153    The injunctions sought against the corporate defendants by ASIC are designed to prevent the corporate defendants from continuing to carry on any financial services business in Australia and from dealing with or engaging with the Blockchain Mining Product or NGS Digital Mining Scheme.

154    Pursuant to Orders I made on 9 September 2024, the corporate defendants have been restrained from the types of conduct to which I have referred on an interim basis since that date. ASIC essentially seeks that the previous interim Orders be varied such that they are permanent. ASIC submits that the utility of the injunctions is to prevent a repetition of the conduct which founded these proceedings.

155    In circumstances where ASIC seeks that NGS Crypto and NGS Group be wound up, and where NGS Digital is already in liquidation, a question arises as to the utility of the permanent injunctions sought by ASIC. In support of the grant of permanent injunctions, ASIC relied on the decision of Besanko J in Stone Assets where his Honour stated:

[48]    Finally, the plaintiff seeks a number of permanent injunctions. In view of the fact that I have decided that it is appropriate to make a winding up order, a question arises as to whether the grant of injunctions is necessary or appropriate (ASIC v IP Product Management Group Pty Ltd (2002) 42 ACSR 343). The utility in granting a permanent injunction where a winding up order under s 461(1)(k) of the Act may also be made has been the subject of previous authority. In ASIC v Pegasus Leverages, Davies AJ acknowledged the scope and discretionary nature of the court’s power to grant injunctive relief, referring to Austin J’s decision in ASIC v Sweeney [2001] NSWSC 114. Davies AJ, however, declined to make the permanent injunctions sought by ASIC in that case. His Honour said (at 583–4):

[A]lthough the court has a wide discretion and is relieved by s 1324(6) and (7) from the shackles which would otherwise be imposed by the well understood principles of equity, nevertheless, the court should not grant an injunction simply because it has been requested to do so. An injunction should not be granted unless the order is directed to and appropriate to achieve an end such as enforcing and giving effect to the statute.

In the present case, no purpose would be served by granting an injunction directed to Pegasus. That company will be under the control of a liquidator and it will be in the course of being wound up as from the time the judgment is delivered …

In my opinion, the court’s power to grant an injunction should be exercised only when it appears that the injunction would serve a useful end. In the present case, the grant of an injunction would not do so. An injunction is not the appropriate way to restrain the activities in which Mr McKim [the director] may engage in the future. Only awards of damages, the imposition of penalties, prosecution and punishment are likely to restrain him.

[49]    However, in the more recent decision of ASIC v West (2008) 66 ACSR 143, Gray J found that the granting of permanent injunctions would serve a useful purpose, despite an order for winding up on the just and equitable ground. His Honour referred to the reasons of Davies AJ, and said of the case before him (at 193):

In my view, in the circumstances of this case, it is appropriate to grant permanent injunctions against Mr West [the director] and JWA [John West & Associates] in the form sought by ASIC. Neither defendant opposed the permanent injunctive relief sought. The evidence before the court indicates that Mr West continued the scheme when on notice of potential contraventions of the Corporations Act and attempted to continue the business in another form in the face of court injunctions prohibiting the scheme’s continued operation. From this is may be concluded that Mr West is susceptible to repeating his contraventions of the Act. The wider form of injunction is warranted and will serve the public interest.

[50]    In this case the defendant has previously shown a willingness to disregard the orders of this court, namely, the interim injunction. This suggests a stronger and more permanent order of the court is required to restrain the defendant’s conduct. However, there remains the issue of utility, in circumstances where a winding up order is to be made. In the end, I am persuaded by the plaintiff’s submission that the presence of Ms Liang in China has the potential to make a clean handover to any appointed liquidator more difficult, particularly given the defendant’s prior disregard for orders of the court. It may be therefore that as in ASIC v West, the defendant, through its director Ms Liang, is more susceptible to repeating its contraventions of the Act, and on this basis, I find the granting of the permanent injunctions sought by the plaintiff, and unopposed by the defendant, to be warranted in the public interest.

156    I note that in the present case there is no evidence before the Court that the corporate defendants have breached the interim injunctions made, or continued to carry on the Mining Investment Scheme. Indeed, there is no analogous evidence in the present case akin to the issues before the Court in Stone Assets. In the circumstances I do not find the decision in Stone Assets of assistance on this issue.

157    Turning to other authorities, I note that the principles relating to the exercise of the Court’s discretion under s 1324 are well settled. In Australian Securities and Investments Commission v Mauer-Swisse Securities Ltd [2002] NSWSC 741 at [36], Palmer J laid out these principles. The principles set out in Mauer-Swisse were helpfully summarised in ActiveSuper at [622] where White J stated them as being:

…

(a)    the jurisdiction which the Court exercises under s 1324 is statutory, and not the Court’s traditional equity jurisdiction;

(b)    the Court is not to be confined by the considerations which would be applicable if it was exercising its traditional equity jurisdiction;

(c)    the Court should consider whether the injunction will have some utility or will serve some purpose within the contemplation of the Corporations Act, and that is so whether the application is for a permanent injunction under subs (1) or an interim injunction under subs (4);

(d)    when the application is made by ASIC rather than a private litigant, the Court is likely to give greater weight to the question of whether the injunction will serve a purpose within the contemplation of the Corporations Act.

The Court may grant a permanent injunction even when a winding up order has already been made against a corporate defendant … Like the making of a declaration, the grant of an injunction under s 1324 may serve to mark the Court’s disapproval of the defendant’s conduct and operate as a deterrent to others: Australian Securities and Investments Commission v Storm Financial Ltd (Receivers and Managers Appointed) (in liq) (No 2) [2011] FCA 858 at [49] ; Re Idylic Solutions [2013] NSWSC 106 at [66], [69].

158    In Australian Securities and Investments Commission v Storm Financial Ltd (Receivers and Managers Appointed) (in liq) (No 2) [2011] FCA 858, Reeves J held:

[49]    On this aspect Mr Gleeson submitted that, so far as these proceedings are now directed to ASIC obtaining an injunction under s 1324 of the Act, they are futile. He submitted this was so because Storm is now in liquidation, all the investment schemes concerned have been wound up and there is therefore no likelihood of any similar conduct occurring in the future. I do not consider this submission can be accepted. There is ample authority to the effect that a statutory provision such as s 1324 is not constrained by the usual equitable principles in relation to the grant of injunctions, including the principle that an injunction should not be issued where there is no likelihood of the conduct in question being repeated in the future. It follows that quite apart from enjoining a repetition of certain conduct, a court may issue an injunction under s 1324 to mark its disapproval of that conduct involved and to deter others from engaging in similar conduct in the future: see Australian Securities and Investments Commission v Sweeney [2001] NSWSC 114 at [34]–[36] per Austin J, Australian Securities and Investments Commission v Parkes (2001) 38 ACSR 355 at [9] per Austin J and Australian Securities and Investments Commission v Mauer-Swisse Securities Ltd (2002) 42 ACSR 605 ; [2002] NSWSC 741 at [14]–[16] and [36] per Palmer J.

(Emphasis added)

159    In Australian Securities and Investments Commission v Sweeney [2001] NSWSC 114, Austin J explained that:

[34]    The present proceedings have been brought by the public regulator to enforce the corporations and securities legislation. According to s1(2) of the Australian Securities and Investments Commission Act 1989 (Cth), in performing its functions and exercising its powers, the plaintiff must strive to achieve various objectives, including:

•    to promote the confident and informed participation of investors and consumers in the financial system;

•    to administer the laws that confer functions and powers on it effectively and with a minimum of procedural requirements; and

•    to take whatever action it can take, and is necessary, in order to enforce and give effect to the laws that confer functions and powers on it.

[35]    These provisions imply that it is appropriate for the Commission to take civil proceedings for declaratory and injunctive relief in respect of past events, even if there is no risk of repetition, where the outcome may establish that the conduct complained of was wrongful (and thereby mark the Court's and the community's disapproval of it) and may deter other wrongdoers. It is appropriate for the Court to take these matters into account in the exercise of its discretion to grant or refuse such relief.

(Emphasis added)

160    I respectfully adopt the observations of their Honours in these decisions.

161    Were the injunctions sought by ASIC ones in the equitable jurisdiction of the Court, there would appear to be no utility in such injunctions being granted. This is so because there is no risk of the corporate defendants committing further contraventions of the Corporations Act for reasons that will become apparent when I turn to the windings up sought by ASIC.

162    However, the injunctions sought are distinct from equitable ones. I am satisfied that there is utility in the Court expressing disapproval of conduct in contravention of the Corporations Act and deterring potential wrongdoers from similar contraventions. I am also satisfied that it is in the public interest to make such declarations where ASIC demonstrates their utility for the broader public, as it has done so here.

163    Accordingly, I am satisfied that the injunctions sought by ASIC should be made pursuant to ss 1101B and/or 1324 of the Corporations Act.

(3) WINDING UP

164    ASIC seeks orders for the winding up of NGS Crypto, NGS Group and the NGS Digital Mining Scheme, on the just and equitable ground.

165    The categories of conduct which justify the winding up of a company on the just and equitable ground are not fixed, and will depend on the circumstances surrounding each particular case: Ebrahimi v Westbourne Galleries Ltd [1973] AC 360 at 374 and 376-379; ActiveSuper at [20].

166    In Australian Securities and Investments Commission v ABC Fund Managers [2001] VSC 383 at [119], Warren J set out three fundamental principles for Courts to consider with respect to an application for winding up. Those principles are:

(1)    there must be a lack of confidence in the conduct and management of the affairs of the company;

(2)    it must be demonstrated that there is a risk to the public interest that warrants protection; and

(3)    there is a reluctance on the part of the Courts to wind up a solvent company.

167    Elaborating on the principles explained in ABC, Gordon J observed in ActiveSuper:

[21]     In relation to the first, a lack of confidence may arise where, “after examining the entire conduct of the affairs of the company” the court cannot have confidence in “the propensity of the controllers to comply with obligations, including the keeping of books, records and documents, and looking after the affairs of the company”: Galanopoulos v Moustafa [2010] VSC 380 at [32]; see also Australian Securities Commission v AS Nominees Ltd (1995) 62 FCR 504 at 532–3; ABC Fund Managers at [117]–[118]; Australian Securities and Investments Commission v International Unity Insurance Pty Ltd (2004) 22 ACLC 1416 at [135]–[139].

[22]    There is thus a significant overlap between the matters relevant to the just and equitable ground and the matters which weigh in favour of the exercise of the court’s discretion to appoint a provisional liquidator. For example, matters which indicate “the propensity of the controllers to comply with obligations, including the keeping of books, records and documents, and looking after the affairs of the company” might also demonstrate that “the company’s affairs have been conducted in a manner without regard to legal requirements or accepted principles of corporate management”.

[23]    In relation to the second, a risk to the public interest may take several forms. For example, a winding up order may be necessary to ensure investor protection or where a company has not carried on its business candidly and in a straightforward manner with the public: International Unity Insurance at [138]; see also Australian Securities and Investments Commission v Finchley Central Funds Management Ltd [2009] FCA 1110 at [3]. Alternatively, it might be justified in order to prevent and condemn repeated breaches of the law: Kingsley Brown Properties at [96]; see also AS Nominees at 527; Australian Securities and Investments Commission v Chase Capital Management Pty Ltd (2001) 36 ACSR 778 at 793. Again, there is an overlap between matters which would pose a risk to the public interest for the purpose of s 461(1)(k) and which are relevant to the appointment of a provisional liquidator.

[24]     In relation to the third, it has been said that “a stronger case might be required where the company was prosperous, or at least solvent”: Kingsley Brown Properties at [96]. Solvency, however, is not a bar to the appointment of a liquidator on the just and equitable ground, particularly where there have been serious and ongoing breaches of the Act: ABC Fund Managers at [124]–[130].

168    I respectfully adopt the observations of their Honours in ABC and ActiveSuper and will apply those observations in relation to each of the defendants ASIC seeks winding up orders in relation to.

Whether NGS Crypto should be wound up

169    Section 461(1) of the Corporations Act relevantly provides that:

(1)    The Court may order the winding up of a company if:

…

(k)     the Court is of the opinion that it is just and equitable that the company be wound up.

170    Section 464 of the Corporations Act relevantly provides that:

(1)     Where ASIC is investigating, or has investigated, under Division 1 of Part 3 of the ASIC Act:

(a)     matters being, or connected with, affairs of a company; or

(b)     matters including such matters;

ASIC may apply to the Court for the winding up of the company.

…

171    ASIC applies for the winding up of NGS Crypto pursuant to ss 461(k) and 464 of the Corporations Act. It is plain from the multitude of affidavits filed by ASIC that it has been conducting investigations into the corporate defendants for several years.

172    NGS Crypto carried on a business in contravention of the requirements of the Corporations Act for at least six years. It did so at the expense of hundreds of investors. It is also subject to interim restraining orders (which will become permanent following the orders I made above) restraining its operations and preventing it from ever resuming those operations. After becoming aware of ASIC’s concerns regarding its operations, the controller of NGS Crypto did not rectify the fatal flaws in its operations. In those circumstances, I have no confidence in the conduct and management of NGS Crypto in respect of its affairs.

173    The rationale behind the requirements placed on businesses by the Corporations Act, including by ss 911A and 911B, are, relevantly, to protect the Australian public and ensure investors can have confidence in the businesses with whom they choose to invest. There is a clear risk to the public and the public interest where companies operate financial services businesses in Australia in contravention of the Corporations Act. I am satisfied that the public, the public interest, and individual investors would be protected by the winding up of NGS Crypto.

174    As was noted by Gordon J in ActiveSuper, it has been said that a stronger case for winding up may be required where a company is solvent. There is no definitive evidence before the Court regarding NGS Crypto’s solvency. However, it is the case that, given the permanent injunctions I have ordered, NGS Crypto will not be in a position to continue its operations and, therefore, meet its obligations under the Mining Investment Agreements. I also observe that the position of the High Court that it is “highly desirable” for the Court to accept parties’ proposals on the facts and remedies in a case, whether there is no disagreement between the parties as to those matters: Commonwealth of Australia v Director, Fair Work Building Industry Inspectorate [2015] HCA 46 at [80]. Here, NGS Crypto has consented to its own winding up. I am satisfied that the issue of NGS Crypto’s solvency is not relevant to its winding up, and am further satisfied that NGS Crypto should be wound up.

Whether NGS Group should be wound up

175    ASIC seeks the winding up of NGS Group pursuant to the Court’s power under s 583 of the Corporations Act. Section 583 of the Corporations Act relevantly provides that:

Subject to this Part, a Part 5.7 body may be wound up under this Chapter and this Chapter applies accordingly to a Part 5.7 body with such adaptations as are necessary, including the following adaptations:

…

(c)    The circumstances in which a Part 5.7 body may be wound up are as follows:

…

(ii)    if the Court is of the opinion that it is just and equitable that the Part 5.7 body should be wound up;

…

176    A Part 5.7 body includes a foreign company that is not registered under Pt 5B.2, but carries on business in Australia, including once that business ceases operations in Australia: Australian Securities and Investments Commission v International Unity Insurance (General) Ltd [2004] FCA 1060 at [19], [22]. NGS Group remains a Pt 5.7 body for the purpose of the winding up order sought by ASIC.

177    A Pt 5.7 body may be wound up if the Court is of the opinion that it is just and equitable to do so: Corporations Act s 583(c)(ii). ASIC submitted, and I agree, that the considerations relevant to a winding up order under s 461(1)(k) are equally applicable to one sought under s 583(c)(ii) of the Corporations Act. That is so because the words used in those subsections are identical.

178    ASIC’s power to seek winding up orders under s 464 extend to an application under s 583 of the Corporations Act: Bailey v Seneca Ltd [2020] FCA 242 at [21] – [23].

179    ASIC has filed substantial evidence, and relied on NGS Group’s own pleadings, as to the financial position of NGS Group, including that:

(1)    NGS group asserted at [28](a) of its ACSR that it cannot meet its obligations and liabilities under each of the Mining Investment Agreements.

(2)    NGS Group agreed (under the Mining Investment Agreements) to pay investors minimum monthly returns on their investments.

(3)    As at 10 April 2024, NGS Group had future liabilities to investors for payment of returns accruing monthly by at least USD$500,000 and totalling at least USD$22,000,000.

(4)    As at 17 July 2025, the digital currency assets of NGS Group identified by its receivers, were worth approximately USD$4,500,000.

(5)    NGS Group appears to assert in its ACSR that it does not have any assets other than the digital currency assets.

180    ASIC further submitted that from 26 February 2018, NGS Group was required to give a Product Disclosure Statement to each person to whom it issued, or to whom arranged for the issue of, the Blockchain Mining Product. Section 1012B of the Corporations Act sets out the circumstances under which a person must issue a Product Disclosure Statement. NGS Group was clearly required to issue a Product Disclosure Statement to each person to whom it offered to issue the Blockchain Mining Product, or for whom it arranged the issue of the Blockchain Mining Product: Corporations Act s 1012B(3)(a)(i)-(ii). NGS Group admitted that it did not provide a Product Disclosure Statement to any investors: 3D ACSR at [29](b).

181    ASIC submitted that a Product Disclosure Statement issued by NGS Group (compliant with ss 1013A-1013M of the Corporations Act) would have stated, at a minimum, information about the financial position of NGS Group, including its present and future liabilities and the value of its assets. Clearly, harm is done to consumers who ought to have received a Product Disclosure Statement, but did not, by the absence of information available to those consumers. As ASIC correctly submitted, it was the intention of Parliament that consumers (such as potential investors in NGS Crypto) were provided detailed information informing them about investment decisions.

182    ASIC also submitted that harm was done to investors by virtue of NGS Group not having held an AFSL. ASIC’s evidence shows that the conditions that would have existed on NGS Group’s AFSL would have required it to maintain a minimum financial position: Affidavit of Paul Eastment of 7 March 2025. As soon as NGS Group’s financial position fell below the requirements of its AFSL, it would have not been able to continue issuing the Blockchain Mining Product. I am satisfied that investors were harmed by NGS Group’s failure to hold an AFSL.

183    In the circumstances I have laid out, and considering that it carried on a business in Australia for at least six years in contravention of several provisions of the Corporations Act and apparently dissipated a significant portion of invested funds, I am satisfied that there is a wholly justifiable lack of confidence in the conduct and management of NGS Group.

184    I consider that winding up NGS Group demonstrates the Court’s condemnation of its actions, and aims to prevent similar repeated breaches of the law: ActiveSuper at [23].

185    Ordinarily, it must be shown that there is some utility in the making of a winding up order, and that there is property of the company within Australia to which a liquidator could lay claim, or recover in some way: Titchfield Management Ltd v Vaccinoma Inc [2008] NSWSC 1196 at [13], [30].

186    ASIC submits that the availability of recoverable assets is not a relevant consideration outside of private litigation, especially where ASIC is seeking the winding up of a company in the public interest on just and equitable grounds. However, for the reasons that follow, I do not consider it necessary to decide this point in the present case.

187    I am satisfied that there is property of NGS Group in Australia to which a liquidator may lay claim: namely, the approximately USD$4,500,000 in digital currency assets in the possession of the receivers. Mr Caten deposed that the majority of those assets were the property of NGS Group, while some were his personal property. In the absence of any evidence from NGS Group about the provenance of those assets, and where due to the injunctions I have made, NGS Group will not resume its operations, I am satisfied that those assets are ones to which a liquidator could lay claim. Given the potential of the digital currency assets to make available funds to the creditors of NGS Group, I am satisfied that there is utility in making the winding up order sought.

Whether the NGS Digital Mining Scheme should be wound up

188    Section 601EE of the Corporations Act provides that:

(1)     If a person operates a managed investment scheme in contravention of subsection 601ED(5), the following may apply to the Court to have the scheme wound up:

 (a)     ASIC;

 (b)     the person operating the scheme;

 (c)     a member of the scheme.

 (2)     The Court may make any orders it considers appropriate for the winding up of the scheme.

189    As I have already found in relation to NGS Group’s contravention of s 601ED(5) of the Corporations Act, the NGS Digital Mining Scheme was an unregistered managed investment scheme.

190    In Mier v F N Management Pty Ltd [2005] QCA 408, Keane JA found that the failure to register a scheme is a sufficient reason in itself for a Court to order that the scheme be wound up. In so finding, Keane JA relied on the following passage from Karl Suleman Enterprizes Pty Ltd (in liq) v Babanour [2004] NSWCA 214:

[51]    The registration requirement for the operation of a managed investment scheme is for the protection of investors. The legislation does not expressly make an unregistered scheme unlawful. Rather it impugns the conduct of the entity responsible for registration by imposing a penal sanction for a contravention of the registration provisions. The members of an unregistered scheme are protected by the provisions whereby the scheme may be compulsorily wound up. There is nothing, therefore, in the scheme of the legislation whereby an implication of an illegality would arise, nor is there anything that points to a legislative intention that contracts entered into as part of an unregistered scheme are illegal.

191    In considering whether an unregistered scheme should be wound up, the Court can take into account matters analogous to those considered in relation to the just and equitable ground: Australian Securities and Investments Commission v Chase Capital Management Pty Ltd [2001] WASC 27 at [73] – [78].

192    I am satisfied that it is in the public interest, and that it is just and equitable that the NGS Digital Mining Scheme be wound up. That is so because of the serious risk to investors in the scheme that is now present due to the scheme (and the corporate defendants who operated and promoted the scheme) having carried on the scheme in blatant contravention of the Corporations Act. It is not in the public interest to allow the NGS Digital Mining Scheme to continue to operate.

193    The question of utility in relation to the winding up of the NGS Digital Mining Scheme is a salient one. The complexity of this point arises through the difficulties in identifying what exactly constitutes scheme property. The topic was thoroughly discussed by Keane JA (with whom McMurdo P and Douglas J agreed) in Mier at [15] – [30]. I do not intend to reproduce the discussion of Keane JA as it suffices to say that, insofar as his Honour held that a liquidator cannot be given the power to collect and raise assets to which the scheme members have no right, I agree with that proposition.

194    In Australian Securities and Investments Commission v Tasman Investment Management Ltd [2006] NSWSC 943, Austin J stated that:

[21]    However, it seems to me that the court's statutory and inherent powers do not generally permit it to make orders that depart from the proprietary rights of the scheme's participants. Mr Parbery's submission implies the proposition that s 601EE(2) authorises the court to approve a distribution program whether or not the proposal reflects the proprietary rights of those involved.

…

[26]    My conclusion is that the court cannot use s 601EE(2) to authorise a distribution of surplus assets of an unregistered scheme otherwise than to those entitled to the assets, in proportion to their entitlements.

195    I respectfully agree with the observations of Austin J in Tasman.

196    I also again note the findings of the High Court in Fair Work Building Inspectorate and, in support of my conclusion, rely on the fact that no party objected to the winding up of the scheme.

197    On the evidence before the Court, I am unable to form a view with any certainty as to what assets of the NGS Digital Mining Scheme might be available to its members in accordance with the members’ rights. It is impossible to attempt to prescribe at this stage what assets might comprise scheme property. Accordingly, I do not propose to do so.

198    However, I am satisfied that a liquidator would be best suited to investigate the affairs of the scheme, collect and raise funds and properly distribute those among the scheme’s members, according to their respective rights. I am also satisfied that the scheme’s members have the best chance of recovering at least some of their contributed funds through a liquidation process.

199    As such, I am satisfied that there is a basis for, and utility in, ordering the winding up of the NGS Digital Mining Scheme, and will so order.

(4) SECTION 1323 ORDERS

200    ASIC seeks, by consent, to vary the existing orders under s 1323 of the Corporations Act against Mendham only to provide for the Travel Restraint Orders (as that term is defined in the Orders of 30 April 2024) to terminate on 31 March 2026. In circumstances where that variation is by consent, I am satisfied that it should be made.

BROWN’S SUBMISSIONS

201    Brown was the only defendant to file submissions in response to ASIC’s submissions on the substantive relief. Brown submitted, in summary, that no final relief was sought against him in these proceedings. He submitted that once the interlocutory relief against the personal defendants was granted, separate proceedings should have been commenced, with only the corporate defendants named, through which the final relief should have been sought. Brown submitted that ASIC’s submissions do not address whether any specific transactions by him or NGS Digital were inappropriate or otherwise contrary to law. It followed, in Brown’s submission, that it was not necessary for the Court to make findings in respect of such transactions or conduct. Alternatively, Brown submitted that it would be appropriate for me to make reference in these reasons to the asserted fact that any determinations in this proceeding would not bind Brown where no relief is sought against him.

202    ASIC filed submissions in response to Brown’s submissions. ASIC submitted, in summary, that whilst it is true that the orders sought do not involve the Court making any findings about Brown’s personal conduct, he would be bound, as against all other parties to the proceeding, by the Court’s findings as to the conduct of NGS Digital. ASIC further submitted that if Brown sought certain prescribed statements to be made in this judgment, he should have filed an application for declaratory relief, seeking that such statements be made.

203    It is pertinent to note that Brown specifically did not seek that the proceedings against him be dismissed, and clearly articulated as much in his submissions.

204    In the absence of any application for declaratory relief by Brown, I decline to make any prescribed statement as sought by Brown in this judgment.

205    Further, I will not make any reference to the way in which the orders I have made will, or will not, bind any of the parties. To do so would prejudice the proper operation of the orders I have made. It is impossible to predict, in a vacuum, any issues with compliance with my orders that might arise at some future time. To make some sweeping statement as to the effect of the orders at this time risks the creation of judicial commentary, or indeed binding statements, on some hypothetical future event. The orders I have made operate as stated. Any issue with the compliance or effect of those orders is an issue for decision at the time where a real dispute arises as to them.

CONCLUSION

206    For the reasons given above, I will make the orders sought by ASIC.

207    ASIC did not seek its costs against NGS Crypto or NGS Group. It reserved its position on costs as to NGS Digital (in relation to the s 1323 relief), and as to Messrs Mendham, Caten and Brown. I will make orders to facilitate hearing the parties in respect of costs.

Associate:

Dated:    18 December 2025

SCHEDULE OF PARTIES