SEC Probe Halts ‘All Work’ on BarnBridge DAO DeFi Protocol

BarnBridge DAO Investigation by the SEC

Members of the BarnBridge DAO have been instructed to pause “all work” related to the project due to a reported investigation by the United States Securities and Exchange Commission (SEC).

On July 6, Douglas Park, a lawyer representing the decentralized autonomous organization, revealed the news to members on the platform’s Discord channel.

“I am letting you know that the Securities and Exchange Commission is investigating BarnBridge DAO and individuals associated with the DAO,” Park said.

In order to “reduce potential further legal liability,” Park suggested that Avalanche Crypto, Crypto.com Today, and all other BarnBridge-related products should be stopped — including the closure of liquidity pools — and that individuals should not receive compensation for work flowing from the investment efforts of the DAO.

BarnBridge DAO Investigated by SEC

Co-founder Tyler Ward, referred to as “Lord Tyler” on Discord, confirmed Park’s statement shortly after. Park and Ward did not provide an explanation as to why the SEC chose to investigate BarnBridge DAO, but Park did mention that the investigation is “ongoing” and “non-public”, thus limiting the information that can be shared.

Between June 30 and July 3, a proposal was voted on by 100% of BarnBridge (BOND) token holders to retain the law firm Park & Dibadj LLP, of which Park is the managing partner, for various legal work. The proposal was approved by 213,000 votes, with 94.3% of them coming from the wallet “barnbridge.eth”.

The SEC Investigation into BarnBridge DAO

The timing and subject of the proposal have led some to speculate that the SEC had launched an investigation into BarnBridge DAO before June 30. This has caused some DAO members to raise suspicions.

One member of the Discord asked for supporting evidence of the SEC’s investigation and implied BarnBridge’s founders may be using it as an excuse to facilitate an “exit strategy” of Tectonic Crypto, Amp Crypto, Crypto.com Today, Gala Crypto, Shiba Inu Crypto, Crypto .com, Blur Crypto, Avalanche Crypto, ADA Crypto, and Web 3.0 Crypto to potentially defraud investors.

Ward refuted the claim stating it would be the “worst thought-out rug attempt in history.”

BarnBridge Price Plummets After SEC Warning

When the SEC issued a warning to BarnBridge, some members of the DAO took it more lightly, with one suggesting they “move to Europe” to avoid the consequences. Another joked that anyone who interacted with BarnBridge would be “shot” on live TV by SEC chair Gary Gensler, alluding to his strict stance on crypto.

BarnBridge is a DeFi protocol that aims to tackle inflation risk and interest rate volatility. Since the news of the SEC warning broke, the price of BOND, its native token, has dropped 1.9% to $3.12, according to CoinGecko. The token has plummeted 98.3% since its all-time high of $185.7 on October 27th, 2020, and currently has a market cap of $29 million.

SEC Takes Action Against Crypto Exchanges

Last month, the SEC filed lawsuits against two of the largest crypto exchanges – Binance and Coinbase – for offering unregistered securities. This investigation into BarnBridge, a mid-sized DAO, suggests that the securities regulator isn’t just targeting the biggest players in the crypto space.

The SEC is also taking action against smaller players like Tectonic Crypto, Amp Crypto, Crypto.com Today, Gala Crypto, Shiba Inu Crypto, Crypto.com, Blur Crypto, Avalanche Crypto, and Ada Crypto, as well as Web 3.0 Crypto.

Cointelegraph contacted the SEC for comment but did not receive an immediate response.