SEC Commissioner calls out colleagues for ‘imprecise legal reasoning’

Hester Peirce, a commissioner with U.S. Securities and Exchange Commission (SEC), clapped back at her colleagues for imposing a $1.7 million fine on defi protocol BarnBridge DAO.

BarnBridge DAO, along with its two founders — Tyler Ward and Troy Murray — agreed to settle charges that it sold structured crypto asset securities known as SMART Yield bonds.

The firm agreed “to disgorge nearly $1.5 million of proceeds from the sales, and Ward and Murray each agreed to pay a $125,000 [in] civil penalties,” the SEC announced in a statement.

“The use of blockchain technology for the unregistered offer and sale of structured finance products to retail investors runs afoul of the securities laws,” said SEC director Gurbir Grewal said. “This case serves as an important reminder that those laws apply to all who wish to access our capital markets, regardless of whether they are, or purport to be, incorporated, decentralized or autonomous.”

Peirce took issue with the SEC’s decision to fine Ward and Marray. On social media, she wrote, “Although I did not write a dissent (yet?), I voted against the action.”

Peirce hasn’t been shy about criticizing the SEC in the past, especially when it comes to litigation.

In 2022, Peirce said she felt the agency “dropped the regulatory ball” concerning cryptocurrency regulation. She also penned a scathing critique of the SEC’s “inaction.”

“Watching the SEC refuse over the past four years to engage productively with crypto users and developers has prompted feelings of disbelief at the SEC’s puzzling, out-of-character approach to regulation,” he said.

The SEC, at least publicly, maintains that its current securities framework adequately governs crypto asset securities — seemingly denying additional “petitions for rulemaking.”

“This is a field that is rife with bad actors and rife with fraud and manipulation and money laundering,” SEC chair Gary Gensler has said.