Hundreds of Australians have suffered heavy losses after the Federal Court ordered the liquidation of NGS Crypto and related entities for operating without a financial services licence.
Court filings show more than 450 investors contributed an estimated $40.2 million to the scheme over several years.
Liquidators have so far identified only $4.6 million in cryptocurrency, leaving a significant shortfall between investor funds and recoverable assets.
The ruling was handed down on 18 December, when Justice Berna Collier ordered NGS Crypto, NGS Group and NGS Digital to be wound up.
The Court found the companies had operated in blatant contravention of the Corporations Act by running an unlicensed financial services business.
The investment scheme was marketed as a digital mining operation promising fixed annual returns of up to 16 percent.
Investors were largely targeted through self-managed superannuation funds, with the scheme pitched as a stable retirement strategy.
Companies linked to NGS reportedly assisted investors in setting up SMSFs to channel retirement savings into the crypto products.
The Australian Securities and Investments Commission launched an investigation after raising concerns about how investor funds were handled.
Justice Collier noted that the controllers failed to address serious compliance flaws even after becoming aware of ASIC’s concerns.
Liquidators from advisory firm McGrathnicol were appointed, with the Court stating liquidation offered the best chance of partial recovery for investors.
The recovery process is expected to be complex due to volatile crypto prices and difficulties tracing digital assets.
Some assets identified by liquidators remain locked in staking arrangements that may not be accessible until as late as 2037.
Liquidators told the Court it is unclear which digital assets correspond to individual investors due to poor record keeping.
Freezing orders remain in place against the companies and their directors to prevent further asset dissipation.
The directors named in the orders include Ryan Brown, Brett Mendham and Mark Ten Caten.
Authorities previously seized Mendham’s passport, while Ten Caten is believed to be outside Australia.
Investors have been urged to contact McGrathnicol as the formal liquidation process moves forward.