SEC Charges DeFi Protocol Rari Capital With Fraud and Unregistered Brokerage Activities

The Securities and Exchange Commission (SEC) announced today that it has reached a settlement with Rari Capital, Inc., a decentralized finance (DeFi) protocol, and its co-founders Jai Bhavnani, Jack Lipstone, and David Lucid. The SEC alleges that they misled investors and engaged in unregistered broker-dealer activities while operating two blockchain-based investment platforms that held over $1 billion in crypto assets at their peak.

Rari Capital settled with the SEC, which charged the firm with the unregistered issuance of three securities related to these platforms. In a separate order, Rari Capital Infrastructure LLC, which took over operations from Rari Capital in 2022, settled charges alleging that it also engaged in the unregistered issuance of securities and acted as an unregistered broker-dealer.

As part of the settlement, Rari's co-founders agreed to pay penalties and be barred from serving as officers and directors for five years, subject to court approval.