The US Securities and Exchange Commission (SEC) has reached a settlement with decentralized finance protocol (DeFi) Rari Capital and its co-founders after accusing them of misleading investors and engaging in unregistered brokerage activities.
According to the announcement made on September 18, the SEC has alleged that Rari Capital's Earn and Fuse pools operated like crypto asset investment funds, allowing individuals to invest their crypto assets in loan pools and earn returns on their investments.
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The complaint filed by the SEC alleges Rari Capital conducted the sale of securities without being registered, offering shares in the pools and their corresponding governance tokens.
In addition, the SEC alleges the company and its co-founders, Jai Bhavnani, Jack Lipstone and David Lucid, promised investors that the pools of returns would automatically and autonomously rebalance their crypto assets to generate the best possible return.