[ad_1]
The SEC’s recent inquiry into the Tim Draper-backed DeFi Money Market platform is the most recent example in a concerning trend of increasing action by regulators against unregistered securities.
As a result of regulatory inquiries, DMM is ceasing operations. mTokens can be redeemed with interest accrued to-date through the following link: https://t.co/mWB1WacKaH
— DMM DAO (@DMMDAO) February 5, 2021
It joins Kik Interactive, Ripple and Coinseed as crypto projects facing the wrath of regulators under aspects of securities law.
The mystery behind DeFi Money Market’s abrupt closure on Feb. 5 was unveiled in the project’s official Telegram channel on Feb. 9, in a statement that revealed the DeFi Money Market Foundation received an investigative subpoena from the United States Securities and Exchange Commission on December 15, 2020.
“We reviewed the subpoena carefully and with the assistance of counsel began complying with the legal requirement to produce documents and make other information available to the SEC,” the post said.
“We have begun negotiations with the SEC staff to resolve its investigation, and in an effort to reach a mutually agreeable resolution, we have concluded that an orderly wind-down of the project is best.”
Without providing many specifics, the statement also assured that investor assets held by the DeFi Money Market — such as DAI, USDC, USDT, or ETH — would be returned to customers “as soon as possible.”
The DeFi Money Market project was initially designed to allow cryptocurrency traders and investors access to tokenized, real-world assets. The public sale for DMG, the governance token used by the DMM DAO, concluded in Jun. 2020 after raising $6.5 M in ETH in less than 48 hours.
It has been plagued with problems since its inception, with the initial sale riddled with swap errors and scammers capitalizing on the confusion. The DMM team had initially described the platform’s closure as the “result of regulatory inquiries.”
Trenchant cryptocurrency critic and Attack of the 50 Foot Blockchain author David Gerard said in a post the action shows the SEC is iramping up efforts to prosecute DeFi-related projects based in the U.S.
He argues this is because “DeFi is pretty blatantly a security in the U.S.” and that related tokens fit the criteria of a security as defined by the Howey Test. Gerard points to previous administrative orders by the SEC, in which an ICO was deemed to constitute sales of unregistered securities, as the “template” for future prosecution efforts.
While the action is concerning, DeFi projects that have more fully decentralized governance may be viewed differently and it remains to be seen how regulators and courts will approach such projects.
Several other non-DeFi cryptocurrency projects have been unfortunate enough to have been targeted by the SEC recently.
On Jan. 24, a New York district court ruled in favor of the SEC’s motion for summary judgment against Kik Interactive, which raised approx. $100 million in token sales in 2017.
In Dec. 2020, the SEC made public their lawsuit against Ripple, alleging its founders of raising $1.3 billion in the sales of unregistered securities.
In Feb. 2020, the SEC filed charges against Steven Seagal for his role in promoting a 2018 ICO.
With Gensler on board as the SEC chair, it’s a great news to Bitcoin and a handful other PoW coins that are self-evident to be non security
But not a good news to many other alts, fair launched or not
Just my 2c
— Dovey “Rug The Fiat” Wan (@DoveyWan) February 12, 2021
And in New York, news emerged yesterday that the State Attorney General is suing crypto trading platform Coinseed for defrauding investors with its ICO under the Martin Act.
[ad_2]
Source link
