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BarnBridge DAO and its two founders are set to pay the SEC over $1.7 million to settle allegations of neglecting to register the offer and sale of BarnBridge’s structured crypto asset securities.
In a press release published on Friday, the Securities and Exchange Commission (SEC) announced that BarnBridge DAO, and its two founders, Tyler Ward and Troy Murray, will pay more than $1.7 million after failing to register the offer and sale of BarnBridge’s SMART Yield bonds, its own version of structured crypto asset securities.
The SEC has additionally charged BarnBridge and its two founders with violations related to the operation of BarnBridge’s SMART Yield pools, alleging that they functioned as unregistered investment companies.
In order to resolve the charges brought forth by the SEC, BarnBridge has agreed to yield almost $1.5 million in proceeds from the sales. Additionally, both Ward and Murray have individually agreed to pay civil penalties amounting to $125,000 each.
“The use of blockchain technology for the unregistered offer and sale of structured finance products to retail investors runs afoul of the securities laws,” said Gurbir S. Grewal, director of the SEC’s Division of Enforcement. “This case serves as an important reminder that those laws apply to all who wish to access our capital markets, regardless of whether they are, or purport to be, incorporated, decentralized or autonomous.”
BarnBridge and its founders characterized SMART Yield bonds akin to asset-backed securities and promoted them extensively to the general public, according to the release.
Investors had the option to acquire either “Senior” or “Junior” SMART Yield bonds through BarnBridge’s website. The SMART Yield system pooled crypto assets provided by investors, utilizing these assets to generate fixed or variable returns to compensate the investors.
As outlined in the orders, SMART Yield garnered investments exceeding $509 million from various investors. BarnBridge received fees from these investors, with the amount contingent on both the size of their investment and their selected yield option.
The BarnBridge DAO previously voted in October to comply with the SEC’s potential demands and pay fines if necessary. Voters also approved the DAO’s treasury to “sell all tokens that it is permitted to sell” if needed, but it is unclear whether that will be required as part of the SEC’s ruling.
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