The Securities and Exchange Commission (SEC) announced a new lawsuit in the realm of cryptocurrency, this time targeting a Decentralized Autonomous Organization (DAO). The enforcement against BarnBridge DAO and its two founders highlights the SEC’s ongoing efforts to regulate the crypto space. The case centers on the alleged unregistered sale of securities to U.S. citizens by BarnBridge DAO, co-founded by Tyler Ward and Troy Murray.
The SEC has penalized the founders for issuing assets without authorization, leading to a settlement where the duo will pay $1.7 million. The securities in question are known as SMART Yield bonds, structured crypto asset securities offered by BarnBridge. This action reflects the SEC’s commitment to pursuing entities that issue unregistered securities.
Additionally, the commission accused the defendants of operating BarnBridge’s SMART Yield pools as unregistered investment companies, imposing a fine of $125,000 on each. SEC’s Director of Enforcement, Gurbir S. Grewal, had previously indicated that 2023 would be a year of reckoning for those issuing unregistered securities and has been actively working towards this goal throughout the year.
Grewal emphasized that the use of blockchain technology to offer and sell structured financial products to individual investors without registration is contrary to securities laws. He stated that this case serves as an important reminder that these laws apply to everyone seeking access to our capital markets, regardless of whether the entities are anonymous, decentralized, or autonomous.
The SEC’s actions signal a clear message to the crypto industry that compliance with securities laws is non-negotiable. The BarnBridge DAO case is a testament to the SEC’s vigilant stance on protecting investors and maintaining fair and orderly markets in the face of emerging technologies.
The SEC’s pursuit of BarnBridge DAO and its founders underscores the regulatory challenges faced by the crypto industry and the importance of adhering to existing financial regulations. It also highlights the SEC’s determination to apply traditional securities laws to new financial products and technologies.