The US SEC accused DeFi platform Rari Capital of unregistered securities issuance and reached a settlement

PANews reported on September 19 that according to The Block, the U.S. Securities and Exchange Commission (SEC) reached a settlement on its charges against DeFi platform Rari Capital after the SEC found that the company and its co-founders misled investors and were not registered as brokers. The SEC said that Rari Capital's co-founders Jai Bhavnani, Jack Lipstone and David Lucid told investors that the Earn platform they managed allowed investors to lend tokens to earn returns and would "automatically and autonomously rebalance" their cryptocurrencies instead of doing it manually, but the company sometimes failed to do this. The SEC said they were also involved in "unregistered broker activities" related to the Fuse platform. The SEC said that the two platforms held a total of more than $1 billion worth of crypto assets at their peak. Certain Earn platform investors are also eligible for Rari governance tokens, which the agency claims is an unregistered security. As part of the settlement, Rari Capital Infrastructure LLC, which acquired Rari Capital in 2022, agreed to stop violating securities laws in the future, and Rari's co-founders agreed to pay fines and be banned from serving as executives and directors for five years. According to previous news, the lending platform Fuse was hacked in May 2022 and $80 million was stolen. Rari Capital subsequently stopped new deposits and began to gradually shut down the Fuse platform.