{"id":10648,"date":"2021-08-08T00:55:17","date_gmt":"2021-08-08T00:55:17","guid":{"rendered":"https:\/\/www.buyucoin.com\/crypto-labs\/us-sec-shuts-down-30-million-defi-money-market-in-first-decentralized-finance-bust\/"},"modified":"2021-08-08T00:55:17","modified_gmt":"2021-08-08T00:55:17","slug":"us-sec-shuts-down-30-million-defi-money-market-in-first-decentralized-finance-bust","status":"publish","type":"post","link":"https:\/\/www.buyucoin.com\/crypto-labs\/us-sec-shuts-down-30-million-defi-money-market-in-first-decentralized-finance-bust\/","title":{"rendered":"US SEC Shuts Down $30 Million Defi Money Market in First Decentralized Finance Bust"},"content":{"rendered":"

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.<\/strong><\/p>\n

SEC\u2019s 1st Enforcement Action Involving Decentralized Finance<\/h2>\n

The SEC announced Friday that it has taken the first enforcement action involving decentralized finance (defi). The case involves \u201csecurities using defi technology.\u201d<\/p>\n

The regulator charged two Florida men \u2014 Gregory Keough and Derek Acree \u2014 and their Cayman Islands company, Blockchain Credit Partners, for \u201cunregistered sales of more than $30 million of securities.\u201d The three were also charged \u201cfor misleading investors concerning the operations and profitability of their business Defi Money Market.\u201d<\/p>\n

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 \u201cgave holders certain voting rights, a share of excess profits, and the ability to profit from DMG governance token resales in the secondary market.\u201d<\/p>\n

The SEC explained that in offering and selling the two tokens, they claimed that \u201cDefi Money Market could pay the interest and profits because it would use investor assets to buy \u2018real world\u2019 assets that generated income, like car loans.\u201d<\/p>\n

When they realized that \u201cthe 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\u2019 principal,\u201d they did not inform investors. Instead, they \u201cmisrepresented how the company was operating, including by falsely claiming that Defi Money Market had bought car loans that they displayed on Defi Money Market\u2019s website.\u201d<\/p>\n

The SEC noted that the defendants \u201cused personal funds and funds from the other company they controlled to make principal and interest payments for mtoken redemptions.\u201d<\/p>\n

<\/p>\n

Daniel Michael, chief of the SEC Enforcement Division\u2019s Complex Financial Instruments Unit, commented: \u201cHere, 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.\u201d The SEC announcement adds:<\/p>\n

Without admitting or denying the findings in the SEC\u2019s 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.<\/p>\n

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.<\/p>\n

What do you think about the SEC going after decentralized finance platforms? Let us know in the comments section below.<\/strong><\/em><\/p>\n

Bitcoin News
\nRegulation, 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<\/p>\n","protected":false},"excerpt":{"rendered":"

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\u2019s 1st Enforcement Action Involving Decentralized Finance The SEC announced Friday that it has taken the…<\/p>\n","protected":false},"author":0,"featured_media":10649,"comment_status":"","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[53,3],"tags":[],"class_list":["post-10648","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-blockchain-news","category-coin-news"],"_links":{"self":[{"href":"https:\/\/www.buyucoin.com\/crypto-labs\/wp-json\/wp\/v2\/posts\/10648"}],"collection":[{"href":"https:\/\/www.buyucoin.com\/crypto-labs\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.buyucoin.com\/crypto-labs\/wp-json\/wp\/v2\/types\/post"}],"replies":[{"embeddable":true,"href":"https:\/\/www.buyucoin.com\/crypto-labs\/wp-json\/wp\/v2\/comments?post=10648"}],"version-history":[{"count":0,"href":"https:\/\/www.buyucoin.com\/crypto-labs\/wp-json\/wp\/v2\/posts\/10648\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.buyucoin.com\/crypto-labs\/wp-json\/wp\/v2\/media\/10649"}],"wp:attachment":[{"href":"https:\/\/www.buyucoin.com\/crypto-labs\/wp-json\/wp\/v2\/media?parent=10648"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.buyucoin.com\/crypto-labs\/wp-json\/wp\/v2\/categories?post=10648"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.buyucoin.com\/crypto-labs\/wp-json\/wp\/v2\/tags?post=10648"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}