US SEC charges DeFi lender for fraudulent $30 million offering

US SEC charges DeFi lender for fraudulent $30 million offering
File photo: The seal of the U.S. Securities and Exchange Commission hangs on the wall at SEC headquarters in Washington, June 24, 2011. REUTERS/Jonathan Ernst

The US SEC has charged a DeFi company for raising funds through fraudulent means.

SEC charges DeFi lender Blockchain Credit Partners

The United States Securities and Exchange Commission announced earlier today that it had charged decentralized finance (DeFi) lender Blockchain Credit Partners for raising funds via fraudulent means. The DeFi lender was alleged to have raised $30 million fraudulently.

In a press release earlier today, the SEC said, “The Securities and Exchange Commission today charged two Florida men and their Cayman Islands company for unregistered sales of more than $30 million of securities using smart contracts and so-called “decentralized finance” (DeFi) technology, and for misleading investors concerning the operations and profitability of their business DeFi Money Market.”

The SEC said Blockchain Credit Partners and the founders, Gregory Keough and Derek Acree, offered and sold securities in unregistered offerings through DeFi Money Market from February 2020 to February 2021.

The regulator added that the DeFi lender used smart contracts to sell two types of digital tokens: mTokens and DMG. The mTokens can be acquired using specified digital assets, with a 6.25% interest, while the DMG are governance tokens that grant holders voting rights, the share of excess profits and the option to earn profits from its resale in the secondary market.

SEC wants more power over the crypto market

The US SEC wants the Congress to grant it more power and authority over the cryptocurrency space. SEC chair Gary Gensler mentioned this during a speech earlier today, stating that he wants the regulatory agency to provide more investor protection in the cryptocurrency space.

Gensler said the crypto regulation needs to cover other emerging areas such as DeFi, stablecoins and cryptocurrency exchanges. However, it is still unclear if the Congress would grant SEC the power and resources it requires to adequately oversee the cryptocurrency sector.

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