DeFi protocol BarnBridge is currently under investigation by the U.S. Securities and Exchange Commission (SEC), according to a tweet on July 7. In response to the investigation, Douglas Park, the elected legal counsel for BarnBridge DAO, advised the protocol to cease creating new pools and close existing liquidity pools in order to minimize legal liabilities.
Furthermore, Park recommended that all work related to BarnBridge products should halt, and individuals involved in the protocol will not be compensated for their work until further notice. Due to the ongoing and non-public nature of the SEC’s investigation, Park was unable to provide additional information regarding the matter.
BarnBridge is a decentralized finance (DeFi) protocol that enables users to earn a fixed return on their crypto asset deposits. At its peak in November 2020, the protocol had approximately $600 million worth of assets locked. However, according to DeFillama data, the total value has since dropped to $1.35 million. Meanwhile, the value of BarnBridge’s BOND tokens has declined by nearly 9% to $3.01, as reported by CryptoSlate.
The SEC’s action against the relatively unknown DeFi protocol has received significant criticism from the crypto community. Marc Zeller, the founder of AaveChan, expressed discontent with the financial regulator’s move, suggesting that it sends a 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 an indication that the regulatory body is not solely focused on major organizations in the cryptocurrency sector. Additionally, there have been discussions within the community about the possibility of forking the project to eliminate any undesirable elements.
In recent weeks, the SEC has intensified its scrutiny of the crypto industry by taking legal action against major crypto firms, such as Coinbase and Binance. The regulator has classified more than 60 cryptocurrencies as securities and has highlighted the noncompliance of crypto firms with existing securities laws.