Why did I quit in 2022

For those of you who might not know, back in 2022 I stepped away from Defi; this did not coincide with some “building in defi sucks” post, or anything of note, I simply stopped posting or engaging in any public settings.

One of my co-founders at the time Anton Nell, did the same, and he made a tweet on the topic.

So what happened.

I had launched Yearn in Jan 2020. To ensure I stay on the right side of regulatory requirements, I raised no money, I sold no tokens, I did nothing that could be considered a breach in any countries securities laws. 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. All code was open source and freely available. I was not a US citizen, I was not working in the US. My only visit to the US had been for a Consensus conference.

Around 2021 I launched Keep3r, under the same framework. No raise, no sale, no equity, no benefit.

In 2021 I received my first SEC letter. It was a simple request for more information on YFI; did I raise, who where the investors, who were receiving profits, etc. I complied, and provided as much information as I could. Just the collection exercise took me weeks of real time and effort to be able to give them the detail they requested (often detail I did not have and had to do hours of research to find). I thought that would be it.

Then came letter two; at this point it became clear I needed legal assistance as the tone was changing, the way I had done all my projects (no incorporation's, no entities, no raises, etc) it meant two things; 1. I had no legal counsel or legal network, 2. I did not have the funds required to really engage. I started asking around in groups I knew and thankfully LexNode aka Gabriel came to the rescue and also introduced me to Stephen Palley, both of whom helped me immensely and charging me extremely reasonable costs. To this day I am infinitely grateful.

The letters kept coming, every-time pivoting to a new angle of attack, it started “investigating” me from the angle of a raise and SEC violation (which again, as a non USA citizen or resident who did not sell anything to USA citizens or residents confused me), as I spent weeks and months of my life trying collect information and answer their questions (often requesting data I simply did not have, but was required to provide), the drain on my time, energy, and resources became apparent. At this point, I was practically forced to completely stop development or R&D, and focus solely on this legal and regulatory battle.

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”. At this point, I had to start proving I was not receiving any benefit, all benefits were being returned to the users, etc. All in all this took 2 years of my life and finally culminated in a point where I was essentially given a choice. I can keep trying to build things for free, receive no benefit, spend hours of my energy and time to release this code into the wild, while needing to constantly face these attacks and have to spend months of my life and real money to defend it. Or I need to step away.

After 2 years of needing to deal with this every month, and endless sleepless nights and stress. I chose the latter. 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.

That being said, my addiction with the space was unavoidable, I spent a few months focusing on tradfi and regulatory positioning, trying to teach myself as much as I could, and then quickly returned to working on the things I loved, decentralized finance and scaling our base layers. I simply could not be public, but kept working tirelessly all these years, and it is why I am finally close to releasing my new primitives.

Just before I “left”, my last few posts were all around regulatory defi, most did not actually read these articles and saw the headline “crypto regulation” and assumed I had become a fed, for those that did read it, they would have seen that I had defined two verticals, crypto regulation (impossible for decentralized smart contracts simply running in the wild, and trying to regulate it is only possible by “chasing the builders away” [which they had successfully done with me]), and regulated crypto (which is things like exchanges, brokers, etc, which are offchain third party).

Knowing the above, go read the article again, and I think it will give you a better understanding on why I wrote it.

Given the new direction of the SEC, I finally figured I can actually write about this, as previously I was strongly advised by those same investigators to not mention the investigation or it could escalate things.

It was a challenging, and incredibly stressful time. And I do not wish any of my fellow builders should have gone through something like that.

I look forward to the future and a new decentralized world we can build.