The DeFi protocol has caught the attention of the Securities and Exchange Commission (SEC). As of Thursday, Barnbridge DAO has been forced to cease all operations. After beating the big central players, is the SEC now turning its attention to DeFi?

In a statement on the official Discord, the Barnbridge DAO announced that the SEC is currently investigating the protocol and “individuals associated with it.” As a result, the DAO announced that it would close all liquidity pools and stop creating more. Furthermore, all work on products related to Barnbridge must cease. Individuals who work with DAO will not be compensated until further notice.

Douglas Park, legal counsel for the project, confirmed that there was only a limited amount of information that could be shared publicly. Co-founders Tyler Ward and Troy Murray will not comment on the current situation.

However, not everyone took the news at face value. A Discord member asked for evidence of the SEC’s investigation and speculated about whether it was a ruse for the founders to evade DAO funds.

However, Ward quickly responded, saying it would be the “worst calculated carpet attempt in history”. Lying about a federal investigation in this public way is highly illegal.

BOND, Barnbridge’s native token, fell around 8.7% after the news. It fell from around $3.30 to $3.01 in three hours and twenty minutes, according to CoinMarketCap.

Is the SEC Running DeFi?

While it is not known why the SEC launched an investigation, it is not the first time that the regulator has put pressure on DeFi projects. In March this year, the agency handed SushiDow, the maker of the Ethereum-based decentralized exchange, SushiSwap, a subpoena.

The latest investigation indicates that the SEC may be turning its attention to smaller DeFi projects in its enforcement efforts. The advent of DAOs, governed by smart contracts and the voices of the community, has complicated the legal landscape immeasurably.

Although the SEC is unlikely to defeat the legal firepower of the likes of Coinbase, a centralized exchange has the money and willingness to take any legal action through to the end.

This year, the chief financial watchdog prosecuted several crypto companies for breaking securities laws. On June 5 and 6, the SEC filed complaints against Binance and Coinbase, respectively.

The latter two are the two largest crypto exchanges in terms of trading volume. Their legal battles represent the most bitter chapter in the SEC’s war on the industry. Both deny any wrongdoing.