In another attack on crypto, BarnBridge Decentralized Autonomous Organization (DAO) members have been instructed to halt all project-related activities in the face of an investigation from the United States Securities and Exchange Commission (SEC).
On July 7, BarnBraidge which is a cross-platform risk management decentralized finance protocol that attempts to tackle inflation risk and interest rate volatility, took to Twitter to reveal the DAO’s lawyer, Douglas Park, had advised it to pause “all work” related to the project in a Discord message, citing, “the SEC is investigating BarnBridge DAO and individuals associated with the DAO.”
— BarnBridge (@Barn_Bridge) July 7, 2023
BarnBridge Feels the Heat from SEC
Park advised that all operations related to BarnBridge products, including the closure of liquidity pools in order to mitigate any further legal repercussions. He also recommended that individuals refrain from accepting compensation for work derived from the DAO’s investment initiatives.
In response to the warning issued by the attorney, Tyler Ward, the co-founder of BarnBridge, confirmed the news. However, both Park and Ward refrained from divulging any further reasons behind the SEC’s probe into BarnBridge DAO. Park clarified that due to the ongoing and non-public nature of the investigation, only limited information could be divulged.
Following the news of the SEC investigation, the price of its native token BOND dropped significantly. According to CoinMarketCap, BOND is down 9.30% in the last 24 hours to trade at $3.04. Meanwhile, over the past seven days, the token has slumped more than 11%, dropping a staggering 98.3% from its all-time high of $185.7 on October 27, 2020.
SEC Could Increase Targeting DeFi
This comes hot on the heels after the SEC beefed up crypto-based regulatory tightening in the US. Furthermore, the attack on BarnBridge shows the American watchdog is stretching its tentacles beyond centralized crypto exchanges and digital assets. It falls in line with a recent report that claimed the US SEC will continue targeting the digital assets industry along with its sub-ecosystems.
In a June 21 report, Berenberg argued the SEC’s war on crypto could now engulf stablecoins and decentralized finance (DeFi). The investment bank claimed that the SEC might weaken the entire DeFi ecosystem if the assumption proves accurate.
The report further suggests that if U.S. regulators target USDC, it could significantly impact the revenue of Coinbase, as the exchange earned approximately $199 million in net revenue in the first quarter of 2023, with about 27% of that derived from interest income earned on USDC reserves.
Anti-crypto War Continues
Earlier this year, the SEC sent a subpoena to SushiDAO. The organization’s disclosure came in the form of a proposal submitted to the Sushi DAO for the establishment of a legal defense fund to cover potential legal costs. The proposal stated,
“Sushi, and Head Chef Jared Grey, were recently served with an SEC Subpoena. We’re cooperating with the SEC.”
Ouch, @SushiSwap served with an SEC Subpoena.https://t.co/yYimXUg3Rc
— Matias Nisenson (@MatiasNisenson) March 21, 2023
These attacks are in line with the SEC’s increasingly aggresive stance with the crypto industry with SEC Chair Gary Gensler calling digital assets as “Wild West”. Recently, leading platforms including Coinbase and Binance have found themselves subject to SEC regulations.
Moreover, these recent developments appear to be an organized attack against the entire structure of the digital-asset markets, with smaller companies likely to become targets if the agency could target the two industry leaders.
