Andre Cronje, a prominent figure in the DeFi space, attributed his departure from the sector in 2022 to legal challenges involving the US Securities and Exchange Commission (SEC).
In a Jan. 28 blog post, Cronje detailed how his legal hurdles with the financial regulator began in 2021 after he launched Keep3r, a DeFi protocol designed to match organizations and other job providers with technical professionals.
SEC investigations
According to Cronje, the SEC initially sought information about Yearn Finance, a project he launched in 2020. At the time, Yearn Finance was a prominent DeFi lending aggregator that had attracted over $6 billion in deposits at its peak in 2021.
Cronje stated that the SEC’s investigation focused on potential ties to fundraising and investor activities. However, he noted that the protocol had “raised no money, sold no tokens [and] did nothing that could be considered a breach in any countries securities laws.”
He added:
“I did not earn any fees from the protocol, I had no founder, team or any allocation, there was no financial benefit of the protocol for myself.”
Still, Cronje spent weeks compiling the information requested by the SEC, often conducting research to find the necessary details.
According to him, he initially assumed that providing the requested data would conclude the matter. However, additional correspondence from the regulator signaled a shift in tone, prompting Cronje to seek legal assistance—a challenge given his lack of resources and legal connections.
He continued:
“As the letters kept flowing, it changed from ‘investigating’ the raise, and when it became apparent that was not an angle of attack it shifted to focusing on the yearn vaults themselves as ‘investment vehicles,’ since the vaults accept third party deposits, ‘does work,’ and then the depositors receive benefit from ‘the work of others.’”
Cronje, a non-US citizen with limited ties to the country’s markets, expressed confusion over the investigation’s scope.
According to him, the SEC inquiries consumed significant time and resources, hindering his ability to focus on innovation. These demands intensified over two years, leading him to leave the DeFi space entirely to avoid further complications.
He wrote:
“After 2 years of needing to deal with this every month, and endless sleepless nights and stress. I chose [to step away]. I am sure many here would say I should have not buckled, but I also believe anyone that says that has never been in a position like this. You receive all of the downside, but none of the benefit.”
Why Cronje is telling his story
Cronje explained that, following advice from regulatory advisors, he refrained from discussing the situation publicly during the investigation to avoid worsening his legal position.
Now, he feels more at ease sharing his story, citing what he sees as a change in the SEC’s enforcement approach under its current leadership.
Cronje’s revelation is unsurprising, considering the SEC’s former chairman, Gary Gensler, is a renowned crypto skeptic who waged significant legal challenges against crypto firms. However, the financial regulatory agency’s current chief, Mark Uyeda, has shown more openness to the sector.
Cronje has since returned to the crypto space as the co-founder of Sonic Labs, the team behind Sonic, a high-performance blockchain solution.
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