Fun

US SEC Shuts Down $30 Million Defi Money Market in First Decentralized Finance Bust

News Feed - 2021-08-08 09:08:45

US SEC Shuts Down $30 Million Defi Money Market in First Decentralized Finance Bust


The U.S. Securities and Exchange Commission (SEC) has taken its first enforcement action involving decentralized finance (defi). The commission has charged a defi platform and its executives for unregistered securities sales of more than $30 million and misleading investors. SEC’s 1st Enforcement Action Involving Decentralized Finance


The SEC announced Friday that it has taken the first enforcement action involving decentralized finance (defi). The case involves “securities using defi technology.”


The regulator charged two Florida men — Gregory Keough and Derek Acree — and their Cayman Islands company, Blockchain Credit Partners, for “unregistered sales of more than $30 million of securities.” The three were also charged “for misleading investors concerning the operations and profitability of their business Defi Money Market.”


They used smart contracts and defi technology to sell two types of digital tokens: mtokens and DMM governance tokens (DMG). The former promised to pay 6.25% interest while the latter purportedly “gave holders certain voting rights, a share of excess profits, and the ability to profit from DMG governance token resales in the secondary market.”


The SEC explained that in offering and selling the two tokens, they claimed that “Defi Money Market could pay the interest and profits because it would use investor assets to buy ‘real world’ assets that generated income, like car loans.”


When they realized that “the price volatility of the digital assets used to purchase the tokens created risk that the income generated through income-generating assets would be insufficient to cover appreciation of investors’ principal,” they did not inform investors. Instead, they “misrepresented how the company was operating, including by falsely claiming that Defi Money Market had bought car loans that they displayed on Defi Money Market’s website.”


The SEC noted that the defendants “used personal funds and funds from the other company they controlled to make principal and interest payments for mtoken redemptions.”


Daniel Michael, chief of the SEC Enforcement Division’s Complex Financial Instruments Unit, commented: “Here, the labeling of the offering as decentralized and the securities as governance tokens did not hinder us from ensuring that Defi Money Market was immediately shut down and that investors were paid back.” The SEC announcement adds: Without admitting or denying the findings in the SEC’s order, respondents consented to a cease-and-desist order that includes disgorgement totaling $12,849,354 and penalties of $125,000 each for Keough and Acree.


According to the commission, the defendants have funded the smart contracts so that mtoken holders could redeem their tokens and receive all principal and interest owed.


What do you think about the SEC going after decentralized finance platforms? Let us know in the comments section below. Ukrainians to Trade and Spend Cryptocurrencies Legally, Digital Ministry Says REGULATION | 4 hours ago Fidelity Investments Engages With Regulators to Bring Crypto Assets Mainstream REGULATION | 7 hours ago Tags in this story decentralized finance, defi bust, defi executives, defi platform, SEC, sec action against defi, sec closed down defi, sec defi, sec defi bust, sec enforcement action, sec shuts down defi, sec takes action against defi


Image Credits: Shutterstock, Pixabay, Wiki Commons Show comments

News Feed

Veteran Trader Peter Brandt Warns Bitcoin’s Price Corrections Can Be Lengthy
Veteran Trader Peter Brandt Warns Bitcoin"s Price Corrections Can Be Lengthy Veteran trader Peter Brandt has warned that bitcoin’s price corrections have taken many months i
Roaring Kitty faces securities fraud claims in ‘doomed’ GME lawsuit
Tom Mitchelhill7 hours agoRoaring Kitty faces securities fraud claims in ‘doomed’ GME lawsuitKeith Gill is facing a new class-action lawsuit for his recent social media posts. However, a lawyer says the case is likel
Circle Expands to Bermuda, Praises Pro-Crypto Island Government
Circle announced today that it will be expanding its regulated services to Bermuda, using its new position in the island nation to service its global audience. Circle cited Bermuda’s pro-crypto regulatory environm
Hacker behind $2M crypto heist receives job offer from victim protocol
Arijit Sarkar13 hours agoHacker behind $2M crypto heist receives job offer from victim protocolDespite losing $2 million in a smart contract exploit, Bedrock offered the hacker a role to help secure its protocol and reco
Crypto Marketplace Purse.io to Dissolve Operations After 6 Years
Crypto Marketplace Purse.io to Dissolve Operations After 6 YearsOn April 16, the crypto firm Purse.io announced the company is planning to dissolve after six years of operation. The
Freedom Convoy Continues, Trudeau Begs Protestors to Stop, Fundraiser Raises $542K in Bitcoin
Freedom Convoy Continues, Trudeau Begs Protestors to Stop, Fundraiser Raises $542K in Bitcoin During the last week, a large number of truckers are still occupying the streets of Ot
Fed Chair Jerome Powell Says ‘You Wouldn’t Need Cryptocurrencies if You Had a Digital US Currency’
Fed Chair Jerome Powell Says "You Wouldn’t Need Cryptocurrencies if You Had a Digital US Currency" Federal Reserve Chairman Jerome Powell believes that there i
Turner Wright5 hours agoFormer Binance​.US CEO joins Hashdex boardBrian Brooks has worked as Coinbase’s chief legal officer, acting comptroller of the currency, CEO of Binance.US and CEO of Bitfury.630 Total views11
Spot Bitcoin ETFs Draw Over $2 Billion Inflows As Ethereum ETFs Turn Green Again – Details
Este artículo también está disponible en español. The US-based spot Bitcoin ETFs produced a magnificent performance in the past week recording $2.1 billion in net inflows
Here Are the Top Public Companies That Have Adopted Bitcoin as a Reserve Asset
Here Are the Top Public Companies That Have Adopted Bitcoin as a Reserve AssetWhen Microstrategy Inc. bought $425 million bitcoin in the last two months, the decision became an impo
Robinhood Turns to Chainalysis to Boost Compliance Ahead of Crypto Wallet Launch
Robinhood Turns to Chainalysis to Boost Compliance Ahead of Crypto Wallet Launch Popular trading platform Robinhood has partnered with blockchain data platform Chainalysis to meet
Tom Mitchelhill3 hours agoBreaking: Mt. Gox trustee changes repayment deadline to October 2024Rehabilitation trustee Nobuaki Kobayashi has extended the Mt. Gox repayment deadline by one year.1841 Total views26 Total shar