The Australian Securities and Investment Commission (ASIC) has filed to appeal its recent loss in its lawsuit against Finder Wallet, which ASIC alleges offered the ‘Finder Earn’ product as an unregistered debenture. 

ASIC originally filed the suit against Finder Wallet in December 2022 and the case was dismissed on March 14 of this year. 

Users of the Finder Earn product from Finder Wallet converted Australian dollars into TrueAUD, a stablecoin pegged to the Australian dollar. Users could then transfer these funds to Finder Wallet in exchange for receiving a yield and Finder Wallet could use the TrueAUD for any purpose it believed would be beneficial.

Finder Wallet is wholly owned by Finder, an Australian firm that compares different financial products. Finder was founded by Fred Schebesta and Frank Restuccia, who have previously tangled with other regulatorily fraught corners of the crypto industry. 

Schebesta purchased a stake in Goldfields Money, an Australian bank, before announcing his intention to launch Australia’s first crypto bank. Shortly after this, his cryptocurrency trading firm, HiveEx, began advertising its ability to get other crypto firms access to banking. Then Sam Bankman-Fried bought HiveEx and started using it to bank FTX, with Goldfields Money named as a counterparty in the FTX bankruptcy.

Schebesta was also an activist for cryptocurrency regulation in Australia, arguing before Parliament that the country should provide deposit insurance for crypto lending businesses.

Read more: HiveEx, Genesis Block, and SBF’s trading desk network

Schebesta stepped down as chief exec of Finder several days before the original lawsuit in 2022, after receiving a warning from regulators. Corporate documents reviewed today still list Schebesta, as well as Finder co-founder Restuccia, as the directors of Finder Wallet. 

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Fred Schebesta, the founder and former CEO of Australian financial services comparison application Finder, self-describes as the ‘Crypto King of Australia.’ He sold his over-the-counter trading (OTC) desk to Alameda Research which was then used to bank FTX.

Finder is a financial services comparison application that allows users to compare different bank accounts, credit cards, or other services. Finder was founded by Schebesta, Frank Restuccia, and Jeremy Cabral. Schebesta stepped down as chief exec of Finder several days before the firm was sued for its Finder Earn product.

Finder Earn allowed users to deposit their cash, which would then be converted into TrueAUD, and subsequently used in a non-specified way to earn yield.

TrueAUD isn’t a commonly used stablecoin. The largest current holders are FTX, Celsius, and Crypto.com, based on blockchain analysis conducted by Protos. Both Celsius and Crypto.com previously offered yield on TrueAUD. Finder hasn’t disclosed who it partnered with to offer this product. Protos has reached out to Finder for clarification and will update if we hear back.

Schebesta and Restuccia are the current directors of Finder based on corporate filings that Protos reviewed. John Orrock, who runs Future Now Ventures, used to be a director. Future Now Ventures is also a shareholder, along with Non Correlated Capital, Restuccia, Schebesta, Cabral, Perpetual Nominees Limited, Lord of W Holdings, and Restuccia Holdings.

Lord of W Holdings is entirely owned by Schebesta and Restuccia Holdings is entirely owned by Restuccia.

Finder is also a shareholder in an entity called Hive Empire, of which Schebesta and Restuccia are directors. The other shareholder for Hive Empire is Hive Empire Investments, one of the investment funds related to Schebesta. Hive Empire was the entity which made a series of political donations in the 2021-2022 Australian election cycle. Shortly before this series of donations began, Schebesta argued to the legislature that Australia should insure cryptocurrency lending activities.

Read more: Finder Wallet sued by Australian regulators for unlicensed Earn product

In January 2022, Finder surveyed a variety of people in order to make a bitcoin price prediction. It eventually settled on predicting a peak value of $93,717 for 2022. Finder later went back and quietly edited its prediction article.

The primary corporate entity for Finder is FINDER.COM PTY LTD, which used to be called Schebesta PTY Limited.

Investment funds

Schebesta is also connected to a variety of different investment vehicles, though the full relationship between these entities is somewhat difficult to parse.

Schebesta has previously described himself as the founder of ‘Hive Empire Capital,’ and an archived version of its website reveals it invested in Animoca Brands, Iris Energy, HiveEx, ‘and many others.’ Additionally, a press release from Balthazar reveals that Hive Empire Capital was also an investor in its token sale.

There are several entities related to these investment activities — distinguishing which one was used for specific investments is not always possible. These entities include Hive Empire Investments, formerly Restuccia Investments, which is entirely owned by Finder. Restuccia and Schebesta serve as directors.

Hive Empire Ventures also featured Restuccia and Schebesta as directors, and lists Lord of W Holdings and Restuccia Holdings as shareholders. It was de-registered in 2022.

The Hive Empire Capital entity was registered in 2021, and therefore can’t be the ‘Hive Empire Capital’ entity used to invest in Animoca Brands, Iris Energy, or HiveEx, as those investments occurred before this entity was incorporated, despite it sharing a name with its fund. This entity is also directed by Schebesta and Restuccia and entirely owned by Finder.

The pair also have the Finder Ventures entity, formerly Hive Empire Ventures IP, which is also directed by Schebesta and Restuccia, and owned by Finder. Previous shareholders were Against the Grain (owned by Cabral), Lord of W Holdings, Restuccia Holdings, and Hive Empire Ventures, which was also deregistered.

Identifying the specific purpose of each entity is complicated by this muddled history. The Finder Ventures website claims its portfolio includes HiveEx and the Finder App. HiveEx was also listed as one of the investments of Hive Empire Capital, back when that was the fund’s name, and HiveEx corporate documents reveal that the now-deregistered entity Hive Empire Ventures was a HiveEx shareholder. It’s unclear how the current Finder Ventures ever had HiveEx in its portfolio.

The Finder Ventures website incorrectly claims that HiveEx was acquired by FTX in August 2020. HiveEx was actually acquired by Alameda Research. This inaccurate claim can also be seen on archived versions of the Hive Empire Capital website. Protos has reached out to Finder and Schebesta to explain this discrepancy.

The Finder Ventures website also describes investing in an ‘undisclosed Bitcoin mining operation.’ This is liekly to be Iris Energy, an entity that Hive Empire Capital invested in and disclosed. Though, it’s still unclear why Hive Empire Capital would disclose the investment while Finder Ventures wouldn’t. Protos has reached out to Finder and Schebesta for clarification on this issue.

OTC trading and banking

In 2018, Schebesta and Restuccia started HiveEx, an OTC trading desk that used the Hive Empire Trading corporate entity. The entity was originally owned by Hive Empire Ventures, which is now deregistered.

Shortly after starting this desk, Schebesta broadened his ambitions and used Lord of W Holdings to purchase a stake in local Australian bank Goldfields Money. HiveEx began advertising its ability to get other cryptocurrency companies access to banking.

Read more: From Alameda chief to bankrupting FTX, meet Caroline Ellison

In August 2020, HiveEx was sold to Alameda Research for a mere $300,000 AUD and Sam Bankman-Fried was immediately made director of the entity. FTX would announce a few days later that HiveEx was a new way to deposit and withdraw from FTX. Eventually the entity would be sold from Alameda Research to FTX Australia, and is now part of the bankruptcy proceedings for the combined FTX/Alameda Research enterprise.

The FTX bankruptcy process ended up listing Goldfields Money as one of the banks that FTX related entities used. The creditor matrix filed in the bankruptcy for FTX includes Finder, HiveEx, and Goldfields Money.

NFTs

As previously mentioned, Hive Empire Capital was an investor in Balthazar’s token sale. Balthazar’s main product allows users to ‘rent’ out play-to-earn NFTs to someone else who will use it to play. Balthazar’s Twitter handle claims it’s a decentralized autonomous organization (DAO), but it remains unclear how it’s decentralized or autonomous.

Its website states that if users want their NFTs back after lending them out, they can “just get in touch with [their] Balthazar Lend account manager, and [Balthazar] will send [their] NFTs back within 48 hours,” adding to concerns over true decentralization and autonomy. Protos has reached out to Balthazar to clarify how or if its organization is truly a DAO.

Balthazar lists Schebesta as a co-founder on its website. Schebesta was a director for both the Balthazar Guild and Balthazar Capital corporate entities that were established in Australia. Both are now deregistered.

Balthazar Capital was 51% owned by Hive Empire Capital, and 49% owned by Covert Capital, which is owned by Balthazar CEO John Stefanidis and several other key executives for Balthazar. Balthazar Guild ownership was evenly split between Hive Empire Capital and Covert Capital. Since those Australian entities have been deregistered, it’s not clear which corporate entities Balthazar now relies on. Protos has reached out to Balthazar to clarify.

Brad Silver, who was head of trading for HiveEx, now leads Partnerships & Investor Relations for Balthazar.

Animoca Brands, one of the portfolio investments for Hive Empire Capital, is listed as an ‘advisor’ to Balthazar on its website, and was the lead investor in its token sale.

Other activities

Schebesta also uses the Schebesta Ventures entity (of which he and Restuccia serve as directors and Finder is the sole shareholder) to sell his ‘Go Live!’ book and course. Both promise to teach you how to develop your business idea.

He also owns a $16 million AUD mansion on the Sydney Coast that he has referred to as his ‘Crypto Castle’ that he rents out on Airbnb for ~$3,800 per night.

Schebesta is also very active on TikTok with over 100,000 followers. He uses his platform to answer critical cryptocurrency questions like: “what would happen if someone bought all the bitcoin?”

Schebesta, who previously described Terra as a “beast to be reckoned with,” lost $20,000 of his personal fortune during the collapse of the Luna/Terra ecosystem.

The self-proclaimed crypto king is currently renting out his castle after stepping down as CEO of the firm he founded. His firm is being sued by Australian securities regulators, and the OTC desk he sold ended up being used as a banking conduit for an alleged fraud.

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