DeFi protocol BarnBridge said the U.S. Securities and Exchange Commission (SEC) is investigating its decentralized autonomous organization (DAO) and team member, according to a July 7 tweet.
To reduce the protocol’s legal liability, Douglas Park, BarnBridge DAO’s elected legal counsel, advised that the protocol should cease the creation of new pools, and old liquidity pools should be closed.
Additionally, Park stated that all work on BarnBridge-related products should stop, adding that people would no longer be compensated for any work concerning the protocol until further notice.
Park noted that the SEC’s investigation was ongoing and non-public, constraining him from sharing further information.
According to its website, BarnBridge is a decentralized finance (DeFi) protocol that allows users to earn a fixed return on their crypto asset deposits. At its November 2020 peak, the total value of assets locked on the protocol was nearly $600 million. However, it has since dropped to $1.35 million, according to DeFillama data.
Meanwhile, BarnBridge’s BOND tokens declined by nearly 9% to $3.01 at the time of writing, according to CryptoSlate’s data.
Community criticize SEC
The crypto community has heavily criticized the SEC’s action against the relatively unknown DeFi protocol.
AaveChan founder Marc Zeller said the financial regulator move sends the clearest signal that “it is safer to be an offshore scammer than an honest builder with a U.S. passport.”
Members of the crypto community have interpreted the SEC’s investigation into BarnBridge as a sign that the regulatory body isn’t focusing solely on major organizations in the cryptocurrency sector and are also questioning the possibility of forking the project without any undesirable elements.
Over the past month, the SEC has increased its scrutiny of the crypto industry, filing legal actions against major crypto firms, Coinbase and Binance. The regulator has labeled over 60 cryptocurrencies securities and highlighted the noncompliance of crypto firms with existing securities law.
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