The regulator charged the former DeFi protocol and its co-founders for allegedly misleading investors and unregistered broker activity involving its pools.
The United States Securities and Exchange Commission (SEC) has settled with decentralized finance (DeFi) protocol Rari Capital and its co-founders for allegedly misleading investors and unregistered broker activity.
According to a Sept. 18 announcement, the SEC claimed that Rari Capital’s Earn and Fuse pools “functioned like crypto asset investment funds,” allowing investors to deposit crypto assets in lending pools and earn returns from their investments. The complaint alleges that Rari Capital conducted unregistered offers and sales of securities by selling interests in these pools and their tied governance tokens.
In addition, the SEC contends that Rari Capital and its co-founders — Jai Bhavnani, Jack Lipstone, and David Lucid, allegedly misled investors into believing the Earn pools would automatically and autonomously rebalance crypto assets for the best yield. According to the agency:
