The Securities and Exchange Commission (SEC) has filed charges against Rari Capital, a decentralized finance (DeFi) protocol, and its co-founders for allegedly misleading investors and engaging in unregistered broker activity. Rari Capital Infrastructure LLC, a successor to Rari Capital, has also been charged with similar violations.
According to the SEC’s complaint, Rari Capital offered two investment products, Earn pools and Fuse pools, which functioned as crypto asset investment funds. Investors could deposit crypto assets into these pools and earn returns. The SEC alleges that Rari Capital conducted unregistered offerings of securities tied to these pools.
The SEC also claims that Rari Capital and its co-founders misled investors about the features and profitability of the investment products. They allegedly misrepresented the automatic rebalancing mechanism and overstated the expected returns, leading to losses for many investors.
Furthermore, the SEC alleges that Rari Capital and its co-founders engaged in unregistered broker activity through their operation of the Fuse platform. Rari Capital Infrastructure LLC, which took over operations of the Fuse platform, is also accused of continuing these violations.
