DeFi Platform, BarnBridge DAO, Agrees to $1.7M Settlement with SEC over Crypto Bonds

By: Eva Baxter

BarnBridge DAO, a decentralized finance (DeFi) platform, and its founders have reached a $1.7 million settlement agreement with the United States Securities and Exchange Commission (SEC). The settlement is related to the unregistered offering and sale of their structured crypto asset securities, popularly known as SMART Yield bonds.

The SEC announcement on December 22, detailed a cease and desist clause preventing further sales of these crypto bonds. This legal action signals the regulator's sustained scrutiny of DAOs within the dynamic crypto market, and the emphasis on legal compliance, independent of decentralized or autonomous structures.

The SEC's inspection of the DeFi platform, established in 2019, was prompted by an extensive marketing campaign for SMART Yield bonds without regard to securities registration requirements. The marketing campaign extensively used social media platforms and was seen as a clear breach of compliance standards. The organization, structured as a DAO, operates without central authority and holds its decision-making process on the Ethereum blockchain through the utilization of the BOND governance token.

This settlement underscores a broader regulatory focus on the crypto sector by the SEC, emphasizing the need for legal compliance and transparency intended for the protection of all market participants. The BarnBridge case serves as a pivotal moment in regulatory oversight within cryptocurrency circles, especially for DeFi projects.