BarnBridge Prepares for SEC Action, Fines

Decentralized Finance Lender BarnBridge is taking an unusual approach to dealing with legal threats from U.S. securities regulators – asking token
BarnBridge Prepares for SEC Action, Fines

In an unusual move, decentralized crypto lending platform BarnBridge is allowing token holders to vote on how to respond to legal threats from American securities regulators.

BarnBridge opened voting Tuesday on a proposal authorizing its founders to comply with SEC orders, including potential fines. The vote follows BarnBridge’s July announcement that the SEC was looking into its possible over-provision of securities to American investors. Despite not being the first decentralized autonomous organization (DAO) targeted by the SEC, BarnBridge seems to be the first to formally consult its community about how to respond. However, as just one team wallet has voted thus far, the vote is essentially symbolic.

The proposal would allow BarnBridge’s founders to distribute tokens and liquidate the company’s over $200,000 treasury, presumably indicating plans to close the company’s U.S. operations. Additionally, money has been set aside for legal costs.

Robert Lynch, a DeFi legal specialist, stated that this appears to be a last-ditch effort to offer community members a voice before the initiative is abandoned. However, BarnBridge probably broke the securities laws, so there had no other option except to comply. He continued.

Before the SEC investigation halted work in July, BarnBridge aimed to develop fixed-income products on blockchain. The founders’ readiness to pay fines and disgorgement indicates they aren’t going to contest the accusations.

As U.S. regulators press down on the industry, some DeFi ventures have shut down services or paid fines for alleged securities laws. DeFi uses automation and blockchain technologies to mimic traditional banking services.

Although BarnBridge’s community vote is unlikely to influence the SEC, it does underscore the unique difficulties decentralized projects confront when handling growing legal action. As its founders comply with regulators’ requests, BarnBridge’s future appears to be set in stone for the time being.

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