Decentralized crypto lending project BarnBridge is taking an unusual approach to dealing with legal threats from U.S. securities regulators – asking token holders to vote on how to respond.
BarnBridge opened voting Tuesday on a proposal authorizing its founders, Tyler Ward, and Troy Murray, to comply with SEC orders, including potential fines. The vote comes after BarnBridge revealed in July it faced an SEC investigation, likely over-providing securities illegally to U.S. investors.
While not the first decentralized autonomous organization (DAO) targeted by the SEC, BarnBridge appears to be the first to formally engage its community on how to react. But the vote is largely symbolic, with only a team wallet having participated so far.
The proposal would let founders liquidate BarnBridge’s over $200,000 treasury and distribute tokens, potentially signaling plans to shut down U.S. operations. Some traction of these funds would also earmarked for legal expenses.
“This seems like a last-ditch effort to give community members a voice before the project’s demise,” said Robert Lynch, a DeFi legal expert.
“But Barnbridge has potentially violated securities law, leaving it with no option but to comply.” He added
Barnbridge sought to build fixed-income products on blockchain before the SEC probe halted progress in July. The founders’ willingness to pay fines and disgorgement signals they don’t intend to fight the allegations.
While BarnBridge’s community vote is unlikely to sway the SEC, it highlights the novel challenges decentralized projects face in navigating increasing legal action. For now, BarnBridge’s fate appears sealed as its founders bow to regulators’ demands.