BarnBridge DAO settles with SEC for $1.7 million, agrees to stop selling crypto bond product

BarnBridge DAO, which operates a small DeFi protocol, and its founders will pay more than $1.7 million to settle charges brought by the Securities and Exchange Commission for failing to register the offering and sale of cryptocurrencies.

The SEC said that BarnBridge and its founders, Tyler Ward, 34, and Troy Murray, 38, the “offering and selling of structured crypto assets known as SMART Yield bonds.” The DAO compared these bonds to asset-backed securities and marketed them to the public, the SEC said in a rack on Friday. BarnBridge did not admit or deny the agency’s findings.

SMART Yield pooled cryptocurrencies deposited by investors and then used those assets to generate returns to pay investors, the SEC said.

“Ward and Murray used social media to promote SMART Yield’s investment potential and returns. Ward and Murray appeared as guests on multiple YouTube interview channels regarding so-called ‘decentralized finance’ to promote SMART Yield as an investment,” the SEC said. said in his command.

SEC probe

In July, BarnBridge attorney Douglas Park told DAO members via Discord that the SEC was to research. Park said at the time that all work on BarnBridge-related products should stop and that people should not be compensated for the work they do for the DAO until further notice.

Later in October, BarnBridge opened one to vote trial on whether Ward and Murray should have the “authority to take any action necessary to comply with the Order of the Securities and Exchange Commission against BarnBridge.”

BarnBridge asked stakeholders at the time whether it had to pay for disgorgement as required by the SEC’s order, and whether it had to “sell any tokens it is authorized to sell and authorize Ward and Murray to distribute the tokens.”

The SEC has taken legal action against DAOs before, including earlier this year when it said American Crypto Fed failed to provide required information about its business operations and financial condition. It also contained materially misleading statements and omissions, including inconsistencies about whether the tokens are securities, the SEC said.

“The use of blockchain technology for the unregistered offering and sale of structured finance products to retail investors violates the securities laws,” Gurbir S. Grewal, director of the SEC’s Division of Enforcement, said in a statement rack on Friday regarding BarnBridge. “This case serves as an important reminder that these laws apply to anyone seeking access to our capital markets, regardless of whether they are or purport to be incorporated, decentralized or autonomous.”