The protocol’s governing body has agreed to pay a $1.4 million disgorgement to the U.S. Treasury, and its two founders will each pay a civil penalty of $125,000.
The governing body for decentralized finance (DeFi) protocol BarnBridge has settled with the United States Securities and Exchange Commission (SEC) and agreed to stop the “unregistered offer and sale of structured finance crypto product,” according to a Dec. 22 announcement from the financial regulator. The agency has issued a cease and desist order as part of the enforcement action.
According to its current documents, BarnBridge allowed users to “earn a fixed return on their deposits by swapping variable APYs from money markets for a fixed APY.” The protocol’s governance token, BOND, was originally distributed as a reward for liquidity providers for Uniswap pools, according to the earliest archived version of the Barnbridge documents. Holders of the BOND token collectively form the BarnBridge decentralized autonomous organization (BarnBridge DAO), which is the respondent in the SEC enforcement action.
In its cease and desist order, the SEC claims that BarnBridge DAO and founders Tyler Ward and Troy Murray advertised “SMART Yield Bonds,” a structured investment product that paid investors a fixed rate of return from a pool of assets, called a “SMART Yield Investment Pool.” To earn the rate of return, the pools swapped investors’ assets for yield-bearing assets from “third-party lending platforms.”
