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Members of the BarnBridge DAO have been ordered to suspend “all work” related to the project following reports of an investigation by the U.S. Securities and Exchange Commission (SEC).
In a July 6 post on the platform’s Discord channel, Douglas Park, a lawyer for the decentralized autonomous organization, broke the news to members.
“I am informing you that the Securities and Exchange Commission is investigating the BarnBridge DAO and individuals associated with the DAO,” Park said.
— BarnBridge (@Barn_Bridge) July 7, 2023
To “reduce possible further legal liability”, Park proposed “a halt to all work” on BarnBridge-related products, including the closing of liquidity pools, and that individuals should not be compensated for work stemming from the DAO’s investment efforts.
Co-founder Tyler Ward, allegedly nicknamed “Lord Tyler” on Discord, confirmed Pak’s message was true on BarnBridge’s Discord shortly after.
Park and Ward did not explain why the Securities and Exchange Commission launched an investigation into the BarnBridge DAO. However, Park explained that since the investigation is “ongoing” and “not public”, only limited information can be shared.
Between June 30 and July 3, 100% of BarnBridge (BOND) token holders voted in favor of a motion to retain Park & Dibadj LLP, a law firm of which Park is a managing partner, as legal counsel to the DAO “for various legal work.” “.
213,000 votes were cast, of which 201,000, or 94.3%, came from the “barnbridge.eth” wallet.
The timing and subject matter of the offer may indicate that the SEC has opened an investigation into the BarnBridge DAO prior to June 30th.
However, some members of the DAO expressed their suspicions about this announcement.
One Discord member requested supporting evidence from the SEC investigation and hinted that the BarnBridge founders could use it as an excuse to implement an “exit strategy” to potentially scam investors.
Ward denied this claim, saying it would be “the worst thoughtful carpet attempt in history”.
Other members took the news more lightheartedly, with one saying it was “time to move to Europe,” suggesting that DAO members might be hiding from the SEC.
Another jokingly stated that anyone who interacts with BarnBridge will be “shot dead” by SEC Chairman Gary Gensler “on the air”, alluding to his hardline stance on cryptocurrencies.
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BarnBridge is a cross-platform DeFi risk management protocol that attempts to manage inflation risk and interest rate volatility.
The price of the native BOND token has fallen 1.9% to $3.12 since the news broke, according to CoinGecko. The token is down 98.3% from its all-time high price of $185.7 on October 27, 2020 and currently has a market cap of $29 million.
Early last month, the SEC filed lawsuits against two of the industry’s largest exchanges, Binance and Coinbase, alleging they offered unregistered securities.
The reported investigation into BarnBridge, a small-to-mid-sized DAO, may suggest that the securities regulator isn’t just targeting the largest entities in the cryptocurrency space.
Cointelegraph contacted the SEC for comment but received no immediate response.