Two cryptocurrency companies go bankrupt with a debt of $160 million
Two Australian cryptocurrency companies have collapsed into liquidation, leaving more than $160 million (US$104 million) owed to hundreds of investors.
The Australian Security and Investments Commission (ASIC) has initiated civil proceedings against NGS companies — NGS Crypto Pty Ltd, NGS Digital Pty Ltd, and NGS Group Ltd — along with their directors Brett Mendham, Ryan Brown, and Mark Ten Caten.
NGS companies operate as blockchain cryptocurrency mining companies and are accused of targeting Australian investors to establish self-regulated superannuation funds. They then converted the funds to cryptocurrency and invested in blockchain mining packages promising fixed returns.
The ASIC estimates that around 450 investors collectively contributed $62 million (US$40 million) to these companies, which allegedly operated without the necessary Australian license.
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The Federal Court appointed liquidators Anthony Connelly, Kathy Sozou, and Jamie Harris of McGrathNicol to manage the digital assets of NGS companies and their directors.
ASIC requested this order to protect the digital assets invested in blockchain mining products from being dissipated. Mr. Mendham has been barred from leaving Australia, and ASIC aims to prevent NGS companies from providing financial services without a proper license.
ASIC chair Joe Longo cautioned Australians about the risks of investing self-managed super funds in cryptocurrency, and emphasized that regulatory compliance is essential to safeguard consumers.
In a separate case, DCA Capital, Digital Commodity Assets Pty Ltd, and the Digital Commodity Assets Fund in Australia have also gone into liquidation. Federal court proceedings have been initiated against director Ashod Balanian due to concerns about mismanagement, lack of licenses, and potential breaches of investment scheme requirements.
Liquidators Scott Langdon, Jennifer Nettleton, and John Mouawad from KordaMentha have been tasked with winding up these companies and their digital assets, revealing $100 million (US$65 million) owed to 100 investors so far.
The Federal Court froze Mr. Balanian’s assets worth $55 million (US$36 million) and instructed him to surrender his passport. However, Mr. Balanian has not cooperated with KordaMentha’s requests for information or assistance in the liquidation process.
