According to official documents, the U.S. Securities and Exchange Commission (SEC) has reached a settlement agreement on the case accusing DeFi protocol Rari Capital and its founders Jai Bhavnani, Jack Lipstone and David Lucid of misleading investors and acting as unregistered brokers. The U.S. SEC stated that Rari Capital offered two investment products: Earn pool and Fuse pool, which functioned similarly to crypto asset investment funds. By selling the interests of these pools and RGT, Rari Capital conducted unregistered securities offers and sales.
Rari Capital and its three co-founders, without admitting or denying the allegations, agreed to a final judgment, including a permanent injunction, a conduct-based injunction, civil penalties, disgorgement and prepaid interest, and a five-year ban on the co-founders from serving as officers and directors. In a separate order, Rari Capital Infrastructure LLC, which took over operations from Rari Capital in 2022, settled with the SEC over allegations that it engaged in unregistered securities offerings and unregistered broker-dealer activities.
