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The U.S. Securities and Exchange Commission (SEC) filed a lawsuit against BarnBridge DAO, a decentralized autonomous organization, and its two founders, Tyler Ward and Troy Murray, to settle charges related to the unregistered offering and sale of structured cryptoasset securities known as SMART Yield securities. He announced that he agreed to pay more than a million dollars.
The SEC also charged the defendants with violations stemming from operating BarnBridge's SMART Yield pools as unregistered investment companies. To resolve the SEC's charges, BarnBridge agreed to return approximately $1.5 million in proceeds from the sales, and Ward and Murray agreed to pay fines of $125,000 each.
Gurbir S. Grewal, Director of the SEC's Division of Enforcement, said:
“The use of blockchain technology for the unregistered offering and sale of structured finance products to individual investors is contrary to securities laws. This case is an important reminder that these laws apply to anyone seeking to access our capital markets, regardless of whether they are anonymous, decentralized or autonomous. “
According to the SEC's orders, defendants likened SMART Yield bonds to asset-backed securities and marketed them broadly to the public. Investors could purchase “Senior” or “Junior” SMART Yield bonds through BarnBridge's website application. SMART Yield pooled cryptocurrencies deposited by investors and used these assets to generate fixed or variable returns to pay investors.
According to the rulings, SMART Yield attracted more than $509 million from investors, and BarnBridge was paid fees by investors based on the size of their investments and return choices.
*This is not investment advice.