SEC Settles Charges with DeFi Platform Rari Capital

The US Securities and Exchange Commission has reached settlements with decentralized finance lending platform Rari Capital and its co-founders, Jai Bhavnani, Jack Lipstone, and David Lucid.

The regulator alleges that Rari Capital operated without proper registration as a broker, offered securities without proper registration, and misled investors.

According to the SEC, Rari Capital offered two pools called Earn and Fuse, which functioned similarly to investment funds for cryptocurrency assets.

However, the SEC claims that Rari Capital violated federal securities laws by selling these pools and also selling the Rari Governance Token.

The co-founders allegedly told investors that the Earn pools were automatically rebalanced to generate the highest yield, but the SEC says this process was actually manual and not always done.

The SEC further alleges that Rari Capital and its co-founders misrepresented the potential earnings for investors, as various fees were not taken into account and a significant portion of Earn pool investors ended up losing money.