BarnBridge DAO and Founders Settle with SEC for $1.7 Million
BarnBridge DAO and its two founders, Tyler Ward and Troy Murray, have agreed to pay the Securities and Exchange Commission (SEC) more than $1.7 million to settle allegations of failing to register the offer and sale of BarnBridge’s structured crypto asset securities. The SEC has also charged BarnBridge and its founders with violations related to the operation of BarnBridge’s SMART Yield pools, claiming they functioned as unregistered investment companies.
Resolution of Charges
To resolve the charges, BarnBridge will surrender nearly $1.5 million in proceeds from the sales. Ward and Murray have individually agreed to pay civil penalties of $125,000 each. Gurbir S. Grewal, director of the SEC’s Division of Enforcement, stated that using blockchain technology for the unregistered sale of structured finance products violates securities laws.
SMART Yield Bonds
BarnBridge promoted its SMART Yield bonds as asset-backed securities to the public. Investors could choose between “Senior” or “Junior” bonds on BarnBridge’s website. The SMART Yield system pooled crypto assets provided by investors to generate fixed or variable returns.
Votes and Treasury
In October, BarnBridge DAO voted to comply with potential SEC demands and pay fines if necessary. The DAO also approved selling tokens from its treasury if required by the SEC’s ruling.
Hot Take: Compliance is Essential in Crypto Markets
The settlement between BarnBridge DAO, its founders, and the SEC highlights the importance of complying with securities laws in the crypto market. This case serves as a reminder that regulations apply to all participants in capital markets, regardless of their incorporation or decentralization claims.
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