The U.S. Securities and Exchange Commission said Wednesday it has settled charges with cryptocurrency lending platform Rari Capital and its co-founders, accusing it of operating as an unregistered broker, as well as offering unregistered securities and misleading investors. The SEC's complaint alleged that Rari co-founders Jai Bhavnani, Jack Lipstone and David Lucid “falsely told investors that the Earn pools would automatically and autonomously rebalance their crypto assets into the highest yield-generating opportunities available when, in reality, the rebalancing mechanism often required manual input, which Rari Capital sometimes failed to initiate.” The Earn and Fuse pools, "which functioned like crypto asset investment funds," breached federal securities law by selling interests in both pools and selling the Rari Governance Token, the complaint said. What's more, Rari and its co-founders "misleadingly touted the high annual percentage yield that investors would earn, but they failed to account for various fees and, ultimately, a significant percentage of Earn pool investors lost money on their investments," the SEC further alleged. Without admitting or denying the SEC's findings, Rari's co-founders agreed to civil fines, permanent injunctions, conduct-based injunctions, disgorgement with prejudgment interest, and equitable officer-and-director bars against the co-founders for a period of five years. The settlements are subject to court approval. The SEC didn't disclose a financial sum of the fines. More on the SEC and Crypto SEC sues two brothers for alleged $60M crypto Ponzi scheme eToro to limit crypto trading for U.S. customers after SEC settlement SEC sues Plutus Lending over Abra Earn crypto lending product
