SEC destroyed the ICO, the DeFi could be next
2 min readA joint SEC and CFTC attack on Abra, according to insiders, could signal an impact against the DeFi, billions-dollars industry.
The SEC and CFTC have announced that they have imposed fines on Abra, which allows users to trade tokenized versions of stocks and foreign currencies.
This could mean that regulators are going to reduce decentralized finances, experts say. Aave CEO and founder of the leading DeFi project says that DeFi protocols must reduce regulatory risk by becoming “sufficiently decentralized”.
Legal experts say regulators have lagged far behind regulations, but DeFi protocol operators are already expecting some intervention.
What happened with Abra?
The SEC said that although the tokenized version of the shares was not actually secured by the shares themselves – the tokens just represented the shares. according to SEC. This means that Abra broke the law by offering them to customers in the United States without taking steps to ensure that they were “eligible parties” under the SEC.
So Abra agreed with the two government agencies to pay a $ 150,000 fine to each organization. The agreement also included approval to stop offering tokenized shares. Abra, as is usual with these types of agreements, did not admit or deny the allegations.
Upcoming strict measures
Legal experts and insiders from the cryptocurrency industry told that regulators may be prepared to take action against DeFi. The fine for Abra is proof that regulators are beginning to take note of the fast-growing industry.
Josh Garcia, a partner at Ketsal, a law firm specializing in cryptocurrency control, said:
“Once market forces push DeFi out of relative ambiguity, regulators will focus on them and take action against companies that break the law. That’s literally in the description of their work. “
We’ve seen it before, when the ICO industry grew to billions of dollars, triggering an alarm on the SEC, even though they didn’t respond immediately. In the last two and a half years since then, the SEC has forced the company to return hundreds of millions of dollars to investors and shut down entire companies.
Garcia said the regulators are now adapting quickly with DeFi. “They can look at DeFi applications, understand them, and present compelling arguments that can jeopardize the time and energy of the entire development team,” he said.
“I expect nothing more than further inquiries, investigations and regulatory action.”
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