BarnBridge DAO suspends DeFi protocol due to SEC investigation.

BarnBridge DAO members have been instructed to halt “all work” related to the project following an alleged investigation by the United States Securities and Exchange Commission (SEC).

In a post on the platform’s Discord channel on July 6, Douglas Park, a lawyer for the decentralized autonomous organization, informed members of the news.

“I am informing you that the Securities and Exchange Commission is investigating BarnBridge DAO and individuals associated with the DAO,” Park said.

— BarnBridge (@Barn_Bridge) July 7, 2023

To “minimize potential legal liability,” Park suggested that all work on BarnBridge-related products should cease, including the closure of liquidity pools. Additionally, individuals should not receive compensation for work resulting from the DAO’s investment efforts.

Co-founder Tyler Ward, known as “Lord Tyler” on Discord, later confirmed the veracity of Park’s message on BarnBridge’s Discord channel.

Park and Ward did not explain the reasons behind the SEC’s investigation into BarnBridge DAO. Park, however, stated that due to the “ongoing” and “non-public” nature of the investigation, only limited information can be shared.

Between June 30 and July 3, 100% of BarnBridge (BOND) tokenholders voted on a proposal to retain the law firm Park & Dibadj, of which Park is the managing partner, as legal counsel for the DAO. A total of 213,000 votes were cast, with 201,000 (94.3%) originating from the wallet “barnbridge.eth.”

The timing and subject of the proposal suggest that the SEC initiated its investigation into BarnBridge DAO prior to June 30.

However, some DAO members have raised suspicions about the announcement. One member on Discord requested supporting evidence of the SEC’s investigation and implied that BarnBridge’s founders may be using it as an excuse to facilitate an “exit strategy” and potentially defraud investors.

Ward dismissed the claim, stating that it would be the “worst thought-out rug attempt in history.”

Other members took the news more lightly, with one suggesting that it’s “time to move to Europe,” implying that DAO members could evade the SEC’s scrutiny by relocating.

Another member jokingly stated that anyone who interacted with BarnBridge would be “shot” by SEC chair Gary Gensler “on live TV,” alluding to his strict stance on cryptocurrencies.

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BarnBridge is a decentralized finance protocol that focuses on cross-platform risk management and aims to address inflation risk and interest rate volatility.

Since the news broke, the price of its native token BOND has fallen by 1.9% to $3.12, according to CoinGecko. The token’s value has dropped by 98.3% since its all-time high price of $185.7 on October 27, 2020, and currently has a market capitalization of $29 million.

Early last month, the SEC filed lawsuits against two of the largest exchanges in the industry, Binance and Coinbase, alleging that they offered unregistered securities.

The reported investigation into BarnBridge, a medium-sized DAO, suggests that the securities regulator is not solely targeting the largest organizations in the crypto space.

Cointelegraph reached out to the SEC for comment but did not receive an immediate response.

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