US SEC shuts down $ 30 million challenge money market in first decentralized finance collapse – Bitcoin News

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The United States Securities and Exchange Commission (SEC) has taken its first enforcement action involving decentralized finance (challenge). The commission billed a challenge platform and its executives for sales of unregistered securities over $ 30 million and deceptive investors.

First SEC enforcement action involving decentralized finance

The SEC announced on Friday that it had taken the first coercive measure involving decentralized finance (challenge). The case concerns “titles using challenge technology”.

The regulator has charged two Florida men – Gregory Keough and Derek Acree – and their Cayman Islands company, Blockchain Credit Partners, with “unregistered sales of over $ 30 million in securities.” The three were also charged with “misleading investors regarding the operations and profitability of their business Defi Money Market”.

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

The SEC explained that by offering and selling the two tokens, they were claiming that “Defi Money Market could pay interest and profit, because it would use investor assets to buy” real-world “income-generating assets, like auto loans ”.

When they realized that “the volatility of the prices of the digital assets used to buy the tokens created a risk that the income generated by the income-generating assets would be insufficient to cover the capital appreciation of the investors”, they did not informed investors. Instead, they “misrepresented the way the business works, including falsely claiming that Defi Money Market purchased auto loans which they post on the Defi Money Market 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, Head of the Complex Financial Instruments Unit of the SEC Enforcement Division, commented: “Here, labeling the offering as decentralized and the securities as governance tokens didn’t bother us. prevented from guaranteeing that Defi Money Market was immediately closed and that investors were reimbursed. ”The SEC announcement adds:

Without admitting or denying the findings of the SEC order, the respondents consented to a cease and desist order which includes restitution in the aggregate amount of $ 12,849,354 and penalties of $ 125,000 each for Keough and Acree.

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

What do you think of the SEC taking on decentralized financial platforms? Let us know in the comments section below.

Keywords in this story decentralized finance, challenge bust, leaders challenge, platform challenge, SEC, dry action versus challenge, closed challenge dry, dry challenge, bust dry challenge, law enforcement action, dry stop challenge, dry takes action against challenge

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