A shocking new report says that Joey Krug, a partner at the venture capital firm Founders Fund, says the U.S. Securities and Exchange Commission (SEC) is pushing founders of decentralized finance (DeFi) out of the crypto business. Krug said at the ETHDenver conference on February 27 that the SEC forced the founders of the DeFi protocol to sign deals, which stopped them from working in crypto again. According to reports, these contracts had non-disparagement terms that prevented people from talking about them in public. Krug’s comments make people in the crypto industry even more worried about what some are calling “Operation Chokepoint 2.0.” This is a rumored plan by the Biden administration to stop crypto innovation by putting pressure on regulators and banks through banking limits.
DeFi founders forced into secret settlements
Krug says that the SEC talked to several founders of the DeFi project and basically forced them to sign settlement deals. Reports say that these deals had terms that forced them to leave the crypto business forever. Even scarier, Krug said that these agreements had gag orders in them that stopped the people who were affected from criticizing the SEC’s actions in public.
Krug said he wasn’t sure about these claims at first. But when he looked at the actual agreements that the affected founders showed him, he was sure that these kinds of threats were being used.
Regulation Crackdown or Targeted Attack?
Krug’s claims align with broader worries that regulators are trying to shut down the crypto business. Crypto business leaders and policymakers have long thought that regulators like the SEC and the Federal Deposit Insurance Corporation (FDIC) are purposely making it hard for crypto companies to run.
Congressional Intervention
Krug said that these imprisoned DeFi founders could only talk about their experiences in public if Congress called them to speak. He noted that many founders are eager to talk about how they say the government impacted their jobs.
Conclusion
It’s still unclear whether these claims will lead to more reviews into how the SEC handles crypto regulations since lawmakers and judges are looking more closely at them. The crypto business is facing uncertain rules, and the fight between new ideas and government control is still going on.
