The U.S. Securities and Exchange Commission (SEC) has taken action against the decentralized finance (DeFi) platform Rari Capital and its co-founders for allegedly misleading investors and operating as unregistered brokers.
Charges Against Rari Capital
Rari Capital claimed that its Earn pools autonomously rebalance crypto assets. However, the platform, which provides lending, borrowing, and yield farming opportunities, allegedly misrepresented the profitability of these investments and charged hidden fees that contributed to significant losses for investors. The platform's co-founders, Jai Bhavnani, Jack Lipstone, and David Lucid, are also accused of engaging in unregistered broker activities by selling interests in the platform’s pools and the Rari Governance Token (RGT).
SEC's Intensified Scrutiny
Since the beginning of the year, the SEC has intensified its commitment to scrutinizing cryptocurrency projects, particularly those falsely marketed as 'decentralized' or 'autonomous,' while violating federal securities laws. The federal regulator has issued Wells notices, filed lawsuits, or reached settlements with various crypto firms, including ShapeShift, TradeStation, Uniswap, and ConsenSys. Under Chair Gary Gensler, the SEC views most digital assets as securities subject to regulation.
ConsenSys Co-Founder Comment
ConsenSys filed its own lawsuit in April, claiming that the SEC had overreached. ConsenSys co-founder and Ethereum veteran Joseph Lubin stated:
The SEC has actively scrutinized the cryptocurrency industry, initiating over 170 cryptocurrency-related enforcement proceedings by the end of 2023, collecting nearly $3 billion in penalties and other costs.
Comments