BarnBridge and its founders Tyler Ward and Troy Murray allegedly sold unregistered SMART Yield bonds, which the SEC considers crypto asset securities. Respondents also were charged with violations stemming from operating BarnBridge’s SMART Yield pools as unregistered investment companies. BarnBridge agreed to disgorge $1,457,000 from the sale and Ward and Murray agreed to civil penalties of $125,000 each.
BarnBridge was developed in 2020 to sell structured finance-type investments in pooled crypto asset vehicles. From March 2021 to May 2023, they sold to the public structured crypto asset securities, known as SMART Yield bonds. BarnBridge offered variable and fixed rate returns to investors who invested in SMART Yield.
According to the SEC’s orders, the respondents compared the SMART Yield bonds to asset-backed securities and marketed them broadly to the public via social media, interviews, and various authored articles. Investors could purchase “senior” or “junior” SMART Yield bonds through BarnBridge’s website application. SMART Yield pooled crypto assets deposited by the investors and used those assets to generate fixed or variable returns to pay investors. A BarnBridge white paper, published by Ward, claimed that SMART Yield bonds would “mirror the safety and security of highly-rated debt instruments offered by traditional finance…while still providing the outsized return” through its smart contract protocols. According to the orders, SMART Yield attracted more than $509 million in investments from investors, and BarnBridge was paid fees by the investors based on the size of their investment and their choice of yield.
As a result of the order, BarnBridge no longer offers its SMART Yield bonds, has ceased development and otherwise maintaining the platform, and has prevented new investment from flowing into the SMART Yield contract. Read the SEC’s press release HERE.