DeFi startup Rari Capital settles with the SEC 

The SEC claimed Rari operated in unregistered broker activities and “misleadingly” claimed investors would receive a higher annual yield

article-image

Artwork by Crystal Le

share

The Securities and Exchange Commission announced a settlement Wednesday with crypto lending startup Rari Capital and its co-founders Jai Bhavnani, Jack Lipstone and David Lucid. 

The settlements are subject to court approval but don’t disclose a financial sum. 

The SEC claims that the co-founders “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.”

Read more: eToro to cease most crypto offerings after SEC settlement

Additionally, the project “misleadingly” claimed that investors would receive a higher annual percentage yield without disclosing fees that would eat into the initial yield. 

“The SEC alleges that Rari Capital and its co-founders engaged in unregistered broker activity through their operation of the Fuse platform,” the SEC said Wednesday.

The founders and Rari Capital, without admitting or denying the investigation’s findings, settled with the SEC. 

Read more: A match made in DeFi: Rari Capital and Fei Protocol merge to ‘FeiRari’

They “consented to the entry of final judgments ordering various forms of relief, including permanent injunctions, conduct-based injunctions, civil penalties, disgorgement with prejudgment interest and equitable officer-and-director bars against the co-founders for a period of five years.” The court has not yet signed off on the settlements. 

Rari also agreed to a cease-and-desist from the SEC regarding the broker registration, with the caveat that the team neither admitted to nor denied the findings.

The protocol, alongside Fei Capital (the two merged back in 2021), was exploited for $80 million two years ago. Fei offered a $10 million bounty to retrieve the assets taken by the hackers.  


Get the news in your inbox. Explore Blockworks newsletters:

Tags

Decoding crypto and the markets. Daily, with Byron Gilliam.

Upcoming Events

Old Billingsgate

Mon - Wed, October 13 - 15, 2025

Blockworks’ Digital Asset Summit (DAS) will feature conversations between the builders, allocators, and legislators who will shape the trajectory of the digital asset ecosystem in the US and abroad.

recent research

Unlocked by Template (10).png

Research

Innovations on Aptos’ technical design through Raptr, Shardines, and Zaptos approach near-optimal latency and throughput by unlocking 100% utilization of network resources, with the capacity to settle 260k transactions per second with latencies less than 800ms. The original Move language was revamped with the launch of Move 2, supporting more expressivity in smart contract logic and a scalable ability to interact with high volume datasets. The ecosystem has benefitted from strong asset inflows, now hosting over $1.3B in stablecoins, $450M in bridged BTC, and $530M in RWAs. Activity in the Aptos ecosystem has grown notably over the past year, with monthly application revenue reaching ~$835k and monthly DEX volumes growing to over $5B, both at new all time highs.

article-image

Interchain Labs will focus on sovereign L1s and institutional demand, abandoning plans for smart contracts on the Cosmos Hub

article-image

Also, only three tokens have outperformed bitcoin so far this year: XMR, HYPE and SKY

article-image

The fund group has submitted proposals in recent months for other funds that would hold litecoin, solana, XRP, HBAR, Sui and others

article-image

Momentum’s back — BTC leads, risk assets follow

article-image

Ondo Finance’s acquisition of blockchain development company Strangelove follows its buy of Oasis Pro

article-image

Cryptocurrency and stock traders alike had a lot to unpack Wednesday