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In the Matter of Blockchain Credit Partners d/b/a DeFi Money Market et al.
Admin. Proc. File No. 3-20453

Feb. 8, 2023

On August 6, 2021, the Commission instituted and simultaneously settled cease-and-desist proceedings (the “Order”) against Gregory Keough and Derek Acree and their company, Blockchain Credit Partners d/b/a DeFi Money Market (“DMM”) (collectively, the “Respondents”). In the Order, the Commission found that from February 2020 to February 2021, the Respondents offered and sold more than $30 million of securities in unregistered offerings by using smart contracts and “decentralized finance” (or “DeFi”) technology to sell digital tokens. In marketing on a website, social media, and other means, Respondents made materially false and misleading statements concerning the operations and profitability of DMM.

According to the Order, the Respondents stated DMM could pay investors 6.25% interest on digital assets because it would use investor assets to buy “real world” assets, like car loans, that would generate sufficient income to pay the promised interest and generate surplus profits. They sold two types of digital tokens: mTokens, which accrued 6.25% interest, and DMG tokens, which were so-called “governance tokens” that purportedly gave DMG token holders certain voting rights, a share of excess profits, and the ability to profit from DMG resales in the secondary market. Respondents promised to pay a stable interest rate to digital asset owners who purchased mTokens and said they could generate excess profit for DMG token owners. During the relevant period, they sold approximately $17.7 million in mTokens and more than $13.9 million in DMG tokens to the public, including U.S. investors. In offering and selling mTokens and DMG tokens, Respondents also claimed that DMM had acquired profitable, income-generating assets in the form of car loans. While another company controlled by Respondents owned such assets, Respondents never transferred ownership of any of those assets to DMM.

The Commission ordered the Respondents to pay $12,849,354.00 in disgorgement, $258,052.00 in prejudgment interest, and $250,000.00 in civil money penalties, for a total of $13,357,406.00, to the Commission. The Commission also created a Fair Fund, pursuant to Section 308(a) of the Sarbanes-Oxley Act of 2002, so the penalties paid, along with the disgorgement and interest paid, can be distributed to harmed investors (the “Fair Fund”). See the Commission’s Order: Release No. 33-10961.

The Fair Fund includes the $7,579,012.00 paid to date by the Respondents, and any additional funds collected from the Respondents, pursuant to the Order, will be added to the Fair Fund. The Fair Fund and has been deposited in a Commission-designated account at the U.S. Department of the Treasury, and any interest accrued will be added to the Fair Fund.

On January 13, 2023 the Commission issued an order appointing Miller Kaplan Arase LLP, as the Tax Administrator of the Fair Fund. See the Commission’s Order: Release No. 34-96664.

On February 24, 2023, the Commission issued an order appointing KCC Class Action Services, LLC, as the Fund Administrator to oversee the administration and distribution of the Fair Fund and, set the administrator’s bond amount.  See the Commission’s Order:  Release No. 34-96977

For more information, please contact the Commission:

Office of Distributions
Email:ENFOfficeofDistributions@sec.gov

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