A hyped stablecoin that raised more than $100 million earlier this year from top Silicon Valley venture capital firms has closed, blaming regulatory issues for its demise.

Called Basis, the stablecoin, formerly known as Basecoin, began development in 2017 as a cryptocurrency that would not suffer price volatility. In April, it raised $133 million to bring the coin to market in a round led by Bain Capital Ventures that included Andreessen Horowitz’s a16z, Lightspeed Venture Partners, Alphabet Inc’s GV, Foundation Capital and others.

Basis was trying to differentiate itself with a platform that acted more like a central bank that issued currency and constricted supply to keep its price steady. By comparison, traditional stablecoins issue coins or tokens that are pegged against an amount held in a fiat currency, most commonly the U.S. dollar.

Because of its untraditional model, Basis was unable to obtain regulatory approval from the U.S. Securities and Exchange Commission. So it decided to close down and return remaining funds to its investors.

In an interview with Forbes today, Salil Deshpande from Bain Capital Ventures said Basis had tried to make changes to comply with U.S. securities law but the company ultimately found this wasn’t worth the effort.

“The team explored a whole bunch of alternatives for what to do about this,” Deshpande said. “Basis’ leadership chose to abandon the idea rather than compromise its original vision.”

Apparently making those changes also would have resulted in Basis appearing like existing stablecoins on the market. “It didn’t seem like a big contribution to the world if we did that,” Deshpande added.

Cryptocurrency startups come and go, and all early-stage companies are inherently risky. But that fact that Basis never considered the legality of its approach until recently is not the fault of regulators but of its founders.

The fact that top-tier Silicon Valley VC firms willfully threw money at a business that was not legal and, as it turned out, was possibly incapable of ever being so based on its original white paper, certainly begs questions about their due diligence process.

Image: Basis