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BarnBridge DAO Settles with SEC for $1.7 Million Over Unregistered Bond Sales

Key Takeaways

BarnBridge DAO, a decentralized autonomous organization, and its founders have agreed to pay over $1.7 million to settle Securities and Exchange Commission (SEC) allegations regarding the unregistered sale of yield-bearing bonds to investors. The SEC charged BarnBridge and its founders with violating federal securities laws by failing to register the offer and sale of the bonds and operating unregistered investment pools.

SEC Allegations and Settlement

The SEC charged that:[SEC press release]
https://www.sec.gov/news/press-release/2023-258

  • BarnBridge DAO and its founders did not register the offer and sale of BarnBridge’s SMART Yield bonds.
  • They ran SMART Yield pools as unregistered investment companies.

To settle the charges, BarnBridge will pay:[SEC press release]

  • Nearly $1.5 million in proceeds from bond sales
  • Founders Tyler Ward and Troy Murray will each pay $125,000 in civil penalties

SEC Enforcement Director Gurbir Grewal said:”The securities laws apply to all market participants…regardless of their business model or the technology involved.”

BarnBridge’s SMART Yield Bonds

BarnBridge presented its SMART Yield bonds as asset-backed securities widely promoted to investors.[Article text] Investors could purchase “Senior” or “Junior” bonds through BarnBridge’s website.

The SMART Yield system collected over $509 million in investments and paid fixed or variable returns. BarnBridge charged fees based on investment size and yield option.[Article text]

BarnBridge DAO Authorization

In October, the BarnBridge DAO voted to comply with SEC demands and authorized using its treasury for fines and potential token sales.[Article text] It remains unclear if the DAO will need to sell tokens as part of the SEC settlement.

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