The U.S. Securities and Exchange Commission (SEC) has charged derivatives protocol BarnBridge DAO and founders Tyler Ward and Troy Murray with selling unregistered securities.

The charges draw attention to the SMART yield bonds as unregistered securities — against federal law in the US. For a second offense, the SEC claims that the SMART yield pools worked as unregistered investment businesses.

Unlike asset-backed securities, Barnbridge's SMART Yield bonds attracted approximately $509M in investment from the general public. The SEC probe, which started in June, forced the DAO to halt operations.

In order to avoid going to jail, Ward and Murray have agreed to pay more than $1.7M to settle the allegations. Furthermore, BarnBridge DAO has agreed to abide by a cease-and-desist order, which forbids them from providing investment contracts.

Gurbir S. Grewal, the director of the SEC's Division of Enforcement, explained how the case shows that everyone involved in the market, including those using blockchain, ought to abide by securities regulations. From its $558M peak in 2021, the total network value locked has decreased to $320K.

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