BarnBridge DAO Settles SEC Charges for Unregistered Sale of Cryptocurrencies
BarnBridge DAO, a small DeFi protocol, and its founders have agreed to pay over $1.7 million to settle charges brought by the Securities and Exchange Commission (SEC) for failing to register the offer and sale of cryptocurrencies. The SEC alleged that BarnBridge and its founders did not register the sale of SMART Yield bonds, which were marketed to the public as asset-backed securities. SMART Yield pooled together investors’ cryptocurrencies to generate returns for investors.
SEC Probe
In July, BarnBridge attorney Douglas Park informed DAO members about the SEC investigation and advised a halt on all work related to BarnBridge products. In October, BarnBridge held a voting process to determine whether Ward and Murray should comply with the SEC’s order. The SEC has previously taken legal actions against DAOs for failing to provide required information and making misleading statements.
Hot Take: The Importance of Compliance in Blockchain Technology
The SEC’s settlement with BarnBridge serves as a reminder that unregistered sales of structured finance products using blockchain technology violate securities laws. Gurbir S. Grewal, director of the SEC’s Division of Enforcement, emphasized that these laws apply to all participants in capital markets, regardless of their incorporation or decentralization status.
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