In re Rari Capital Infrastructure

UNITED STATES OF AMERICA 
Before the 
SECURITIES AND EXCHANGE COMMISSION 
 
 
SECURITIES ACT OF 1933 
Release No. 11306 / September 18, 2024 
 
SECURITIES EXCHANGE ACT OF 1934 
Release No. 101075 / September 18, 2024 
 
ADMINISTRATIVE PROCEEDING 
File No. 3-22143 
  
 
In the Matter of 
 
Rari Capital Infrastructure 
LLC, 
 
Respondent. 
 
ORDER INSTITUTING CEASE-AND-
DESIST PROCEEDINGS PURSUANT TO 
SECTION 8A OF THE SECURITIES ACT 
OF 1933 AND SECTION 21C OF THE 
SECURITIES EXCHANGE ACT OF 1934, 
MAKING FINDINGS, AND IMPOSING A 
CEASE-AND-DESIST ORDER 
  
I. 
 The Securities and Exchange Commission (“Commission”) deems it appropriate that cease-
and-desist proceedings be, and hereby are, instituted pursuant to Section 8A of the Securities Act 
of 1933 (“Securities Act”) and Section 21C of the Securities Exchange Act of 1934 (“Exchange 
Act”), against Rari Capital Infrastructure LLC (“Respondent”). 
 
II. 
 In anticipation of the institution of these proceedings, Respondent has submitted an Offer 
of Settlement (the “Offer”) which the Commission has determined to accept.  Solely for the 
purpose of these proceedings and any other proceedings brought by or on behalf of the 
Commission, or to which the Commission is a party, and without admitting or denying the findings 
herein, except as to the Commission’s jurisdiction over Respondent and the subject matter of these 
proceedings, which are admitted, Respondent consents to the entry of this Order Instituting Cease-
and-Desist Proceedings Pursuant to Section 8A of the Securities Act of 1933 and Section 21C of 
the Securities Exchange Act of 1934, Making Findings, and Imposing a Cease-and-Desist Order 
(“Order”), as set forth below. 
 

 
 
 
2 
III. 
 On the basis of this Order and Respondent’s Offer, the Commission finds
1
 that:  
 
Summary 
1. These proceedings arise from Respondent’s operation and eventual wind down in 
2022 of a crypto asset trading platform called Fuse that allowed individual users to create pools for 
the depositing and borrowing of crypto assets.   
2. Fuse users depositing crypto assets into these pools received a pro rata share of 
interest earned from borrowing activity in the pools.  Respondent advertised Fuse’s services through 
its public website, social media channels, and direct communications.  The interests in the Fuse 
pools, represented by crypto assets called “fTokens,” were offered and sold as investment contracts 
and thus securities.  Respondent did not register the offerings or sales of interests in the Fuse pools 
with the Commission, and the interests did not qualify for an exemption from registration.  As a 
result, Respondent violated Sections 5(a) and 5(c) of the Securities Act.  
3. In addition, Fuse held crypto assets deposited by users in smart contracts deployed 
on the Ethereum blockchain, and received transaction instructions from users and executed those 
transactions.  Additionally, Fuse assigned a letter-graded “Rari Safety Score” to each pool based on 
a risk assessment of each pool.  Respondent maintained control over the Fuse platform, and also 
created and administered several of the larger Fuse pools.  Respondent generated revenue by 
charging a performance-based fee of approximately 10 percent of the interest earned from 
depositing and borrowing activity in each pool.  The crypto assets held and handled by Respondent 
in connection with transactions that were effected on the Fuse platform included crypto assets that 
were offered and sold as investment contracts, and thus securities, as defined under Section 2(a)(1) 
of the Securities Act and Section 3(a)(10) of the Exchange Act.  See also Report of Investigation 
Pursuant to Section 21(a) of the Securities Exchange Act of 1934: The DAO (Exchange Act Rel. 
No. 81207) (July 25, 2017).  Respondent, therefore, operated as a broker under Section 3(a)(4)(A) 
of the Exchange Act.  As such, Respondent was required to register as a broker with the 
Commission absent an applicable exemption or exception from registration.  It failed to do so and 
thus violated Section 15(a) of the Exchange Act. 
Respondent 
4. Rari Capital Infrastructure LLC is a Delaware limited liability company that 
was formed in March 2022 to facilitate development of, among other things, the Fuse platform.  
Respondent has never been registered with the Commission in any capacity and has never had any 
securities registered with the Commission. 
 
 
1
 The findings herein are made pursuant to Respondent’s Offer of Settlement and are not binding 
on any other person or entity in this or any other proceeding. 
 

 
 
 
3 
Other Entity 
5. Rari Capital, Inc. (“Rari Capital”) is a Delaware corporation principally based in 
Los Angeles, California and created in June 2020 by three co-founders.  Rari Capital created the 
Fuse platform and operated the web-based user interface that enabled users to access and interact 
with the smart contracts underlying the Fuse platform, among other things.  Rari Capital has never 
been registered with the Commission in any capacity and has never had any securities registered 
with the Commission. 
Facts 
6. Rari Capital created and launched the Fuse platform in March 2021.  The Fuse 
platform allowed individual users to create unique pools to facilitate the depositing and borrowing 
of crypto assets, including crypto assets offered and sold as securities.  The Fuse platform enabled 
pool creators to customize the depositing and borrowing parameters for the pools, such as the types 
of crypto assets that could be deposited and lent, fee amounts, interest rate curves, and collateral 
requirements.  After creating a pool on the Fuse platform, the pool creator retained administrator 
rights to alter the parameters for the given pool, sometimes referred to as a “liquidity pool.”  
Meanwhile, Fuse users could make deposits into any Fuse pool.   
7. The Fuse platform was based on a set of smart contracts created by Rari Capital that 
were deployed and run on the Ethereum blockchain, and that held the crypto assets deposited by 
Fuse platform users.  Rari Capital also developed and provided a web-based user interface that 
enabled users to access and interact with the smart contracts underlying the Fuse platform.  Through 
the Fuse platform, users could either deposit crypto assets into a pool and earn their respective share 
of interest on borrowing activity in that pool, or, after depositing collateral, borrow from a pool by 
withdrawing other crypto assets.  For each specific Fuse pool, the smart contracts pooled together 
the crypto assets deposited by users into that pool, and made those crypto assets available for 
borrowing from that pool.  Users who borrowed crypto assets paid interest, which funded returns to 
the users who deposited the crypto assets in the pool.  Users who deposited the crypto assets 
received a token, at times called an “fToken” and tradeable on secondary crypto asset trading 
platforms, that evidenced their interest in their specific Fuse pool and their right to receive a pro rata 
share of the interest earnings.  
8.  Through the smart contracts created by Rari Capital, Fuse received depositing and 
borrowing transaction instructions from users and executed those instructions, if the conditions for 
such requests were met within a given Fuse pool.  Rari Capital, through permissions it established in 
the Fuse platform’s smart contracts, maintained the ability to shut down the platform, replace the 
platform’s underlying smart contracts, and revoke the pool creators’ administrator rights.   
9. Through Rari Capital’s public website, social media channels, and direct 
communications, Rari Capital and its employees solicited users to deposit crypto assets into and 
borrow crypto assets from the pools on the Fuse platform.  Rari Capital also promoted Fuse and 
specific Fuse pools by highlighting the purportedly high annual percentage yields associated with 
certain pools. 

 
 
 
4 
10. In addition, Rari Capital and its employees engaged in certain services to support 
depositing and borrowing on the Fuse platform.  For example, Rari Capital assigned a “Rari Safety 
Score,” graded from A to F, to each Fuse pool that purported to provide a risk assessment of each 
pool.  Fuse users could view these “Rari Safety Scores” on both the platform’s user interface and 
Rari Capital’s website.  Rari Capital also created and administered several of the larger Fuse pools.  
11. For its services, Rari Capital charged a performance-based fee of approximately 10 
percent on the interest earned in each Fuse pool.  Interest earned in each pool depended on the 
interest rate curve selected by the pool creator and fluctuated based on the depositing and borrowing 
transactions within a given pool.  A smart contract created by Rari Capital automatically calculated 
these fees, and once accrued, Rari Capital maintained the authority to collect them.  Rari Capital at 
times exercised this authority and collected fees.  
12. Starting in December 2021, the co-founders of Rari Capital took less active roles in 
developing the Fuse platform.  In March 2022, certain other Rari Capital personnel created 
Respondent separately from Rari Capital and its co-founders to operate and further develop the Fuse 
platform.  This change in leadership was completed in June 2022, when the CEO of Rari Capital 
resigned.  Respondent and its employees solicited users over the internet to deposit and borrow 
crypto assets on the Fuse platform.  Respondent also obtained the ability to shut down the platform, 
replace the platform’s underlying smart contracts, and revoke the pool creators’ administrator rights.  
Respondent operated and developed the Fuse platform with the same services and features 
described above, including the assignment of letter grades to pools, the administration of several 
larger Fuse pools, and the collection of fees from interest accrued from depositing and borrowing 
activity on the Fuse platform.  
13. In May 2022, a malicious actor exploited the code of the Fuse platform and stole 
crypto assets purportedly having a market value of approximately $80 million.  Soon after the 
exploit, Respondent halted new depositing activity on the Fuse platform, began winding down 
operations, and provided reimbursements to users harmed in the exploit.  Ultimately, Respondent 
used the approximately $2.32 million of performance-based fees it had collected from the pools to 
compensate Fuse users and suspended its operation of the Fuse platform. 
14. At Fuse’s peak, the smart contracts for the Fuse platform held crypto assets 
purportedly having a market value of approximately $1 billion.  Over the life of the Fuse platform, 
approximately 180 Fuse pools were created and over 10,000 users used the platform at one time or 
another. 
15. The crypto assets that were deposited and borrowed on the Fuse platform included 
those that were offered and sold as investment contracts, and thus securities, under SEC v. W.J. 
Howey Co., 328 U.S. 293 (1946). 
16. Respondent never registered as a broker with the Commission or operated pursuant 
to any exception or exemption from registration. 

 
 
 
5 
17. No registration statement was filed or in effect for Respondent’s offers and sales of 
Fuse pool interests, nor were any exemptions from registration available. 
Violations 
18. Under Section 2(a)(1) of the Securities Act and Section 3(a)(10) of the Exchange 
Act, a security includes “an investment contract.”  See 15 U.S.C. §§ 77b(a)(1) and 78c(a)(10).  
Based on the facts set forth above, a user’s depositing of crypto assets into a Fuse pool in exchange 
for a token that evidenced the user’s interest in the pool and right to receive a pro rata share of the 
interest earned through the pool’s activity constituted the offer and sale of investment contracts.  See 
Howey, 328 U.S. at 301.  Investors in the Fuse pools tendered money, in the form of crypto assets, 
to the Fuse platform to participate in the Fuse pools.  Investors’ crypto assets were pooled and were 
made available for borrowing.  Users who borrowed assets paid interest to the specific pools that 
supported returns to the investors in those Fuse pools.  The returns earned by Fuse pool investors 
were a function of the pooling of the crypto assets deposited by investors and the ways in which the 
smart contracts deployed those assets.  In this way, each pool investor’s fortune was tied to the 
fortunes of the pool’s other investors.  In addition, because Respondent earned revenue for itself 
from interest paid by borrowers, the Fuse pool investors’ fortunes were also linked to those of 
Respondent.  Through its public statements and the economic structure of the Fuse pools, 
Respondent invited Fuse pool investors to reasonably expect that they would earn profits derived 
from the efforts of Respondent and others.   
19. Section 5(a) of the Securities Act states that “[u]nless a registration statement is in 
effect as to a security, it shall be unlawful for any person, directly or indirectly, (1) to make use of 
any means or instruments of transportation or communication in interstate commerce or of the mails 
to sell such a security through the use or medium of any prospectus or otherwise, or (2) to carry or 
cause to be carried through the mails or in interstate commerce, by any means or instruments of 
transportation, any such security for the purpose of sale or for delivery after sale.” 
20. Section 5(c) of the Securities Act states that “[i]t shall be unlawful for any person, 
directly or indirectly, to make use of any means or instruments of transportation or communication 
in interstate commerce or of the mails to offer to sell or offer to buy through the use or medium of 
any prospectus or otherwise any security, unless a registration statement has been filed as to such 
security.” 
21. As a result of the conduct described above, Respondent violated Sections 5(a) and 
5(c) of the Securities Act.   
22. Section 3(a)(4)(A) of the Exchange Act defines a “broker” as “any person engaged 
in the business of effecting transactions in securities for the account of others.”  Based on the 
conduct described above, Respondent was acting as an unregistered broker.  As a result, Respondent 
violated Section 15(a) of the Exchange Act, which, in relevant part, prohibits any broker from 
making use of the mails or any instrumentality of interstate commerce, to effect any transaction in, 
or induce or attempt to induce the purchase or sales of, any security unless the broker is registered in 

 
 
 
6 
accordance with Section 15(b) of the Exchange Act absent an applicable exemption or exception 
from registration.   
Respondent’s Cooperation and Remedial Efforts 
23. In determining to accept the Offer, the Commission considered the cooperation 
afforded the Commission staff by Respondent and Respondent’s remedial efforts to stop trading 
activity and wind down the Fuse platform following the May 2022 platform exploit, including 
Respondent’s voluntary return to harmed users of the performance-based fees that it had collected.   
IV. 
 In view of the foregoing, the Commission deems it appropriate to impose the sanctions 
agreed to in Respondent’s Offer. 
 
 Accordingly, it is hereby ORDERED that: 
 
 A. Pursuant to Section 8A of the Securities Act and Section 21C of the Exchange Act, 
Respondent cease and desist from committing or causing any violations and any future violations of 
Sections 5(a) and 5(c) of the Securities Act as well as Section 15(a) of the Exchange Act.    
 
 B. Respondent acknowledges that the Commission is not imposing a civil penalty 
based upon its cooperation in a Commission investigation.  If at any time following the entry of the 
Order, the Division of Enforcement (“Division”) obtains information indicating that Respondent 
knowingly provided materially false or misleading information or materials to the Commission, or 
in a related proceeding, the Division may, at its sole discretion and with prior notice to the 
Respondent, petition the Commission to reopen this matter and seek an order directing that the 
Respondent pay a civil money penalty.  Respondent may contest by way of defense in any 
resulting administrative proceeding whether it knowingly provided materially false or misleading 
information, but may not: (1) contest the findings in the Order; or (2) assert any defense to liability 
or remedy, including, but not limited to, any statute of limitations defense. 
 
 By the Commission. 
 
 
Vanessa A. Countryman 
Secretary 

UNITED STATES OF AMERICA 

Before the 

SECURITIES AND EXCHANGE COMMISSION 

 

 

SECURITIES ACT OF 1933 

Release No. 11306 / September 18, 2024 

 

SECURITIES EXCHANGE ACT OF 1934 

Release No. 101075 / September 18, 2024 

 

ADMINISTRATIVE PROCEEDING 

File No. 3-22143 

  

 

In the Matter of 

 

Rari Capital Infrastructure 

LLC, 

 

Respondent. 

 

ORDER INSTITUTING CEASE-AND-

DESIST PROCEEDINGS PURSUANT TO 

SECTION 8A OF THE SECURITIES ACT 

OF 1933 AND SECTION 21C OF THE 

SECURITIES EXCHANGE ACT OF 1934, 

MAKING FINDINGS, AND IMPOSING A 

CEASE-AND-DESIST ORDER 

  

I. 

 The Securities and Exchange Commission (“Commission”) deems it appropriate that cease-

and-desist proceedings be, and hereby are, instituted pursuant to Section 8A of the Securities Act 

of 1933 (“Securities Act”) and Section 21C of the Securities Exchange Act of 1934 (“Exchange 

Act”), against Rari Capital Infrastructure LLC (“Respondent”). 

 

II. 

 In anticipation of the institution of these proceedings, Respondent has submitted an Offer 

of Settlement (the “Offer”) which the Commission has determined to accept.  Solely for the 

purpose of these proceedings and any other proceedings brought by or on behalf of the 

Commission, or to which the Commission is a party, and without admitting or denying the findings 

herein, except as to the Commission’s jurisdiction over Respondent and the subject matter of these 

proceedings, which are admitted, Respondent consents to the entry of this Order Instituting Cease-

and-Desist Proceedings Pursuant to Section 8A of the Securities Act of 1933 and Section 21C of 

the Securities Exchange Act of 1934, Making Findings, and Imposing a Cease-and-Desist Order 

(“Order”), as set forth below. 

 



 

 

 

2 

III. 

 On the basis of this Order and Respondent’s Offer, the Commission finds1 that:  

 

Summary 

1. These proceedings arise from Respondent’s operation and eventual wind down in 

2022 of a crypto asset trading platform called Fuse that allowed individual users to create pools for 

the depositing and borrowing of crypto assets.   

2. Fuse users depositing crypto assets into these pools received a pro rata share of 

interest earned from borrowing activity in the pools.  Respondent advertised Fuse’s services through 

its public website, social media channels, and direct communications.  The interests in the Fuse 

pools, represented by crypto assets called “fTokens,” were offered and sold as investment contracts 

and thus securities.  Respondent did not register the offerings or sales of interests in the Fuse pools 

with the Commission, and the interests did not qualify for an exemption from registration.  As a 

result, Respondent violated Sections 5(a) and 5(c) of the Securities Act.  

3. In addition, Fuse held crypto assets deposited by users in smart contracts deployed 

on the Ethereum blockchain, and received transaction instructions from users and executed those 

transactions.  Additionally, Fuse assigned a letter-graded “Rari Safety Score” to each pool based on 

a risk assessment of each pool.  Respondent maintained control over the Fuse platform, and also 

created and administered several of the larger Fuse pools.  Respondent generated revenue by 

charging a performance-based fee of approximately 10 percent of the interest earned from 

depositing and borrowing activity in each pool.  The crypto assets held and handled by Respondent 

in connection with transactions that were effected on the Fuse platform included crypto assets that 

were offered and sold as investment contracts, and thus securities, as defined under Section 2(a)(1) 

of the Securities Act and Section 3(a)(10) of the Exchange Act.  See also Report of Investigation 

Pursuant to Section 21(a) of the Securities Exchange Act of 1934: The DAO (Exchange Act Rel. 

No. 81207) (July 25, 2017).  Respondent, therefore, operated as a broker under Section 3(a)(4)(A) 

of the Exchange Act.  As such, Respondent was required to register as a broker with the 

Commission absent an applicable exemption or exception from registration.  It failed to do so and 

thus violated Section 15(a) of the Exchange Act. 

Respondent 

4. Rari Capital Infrastructure LLC is a Delaware limited liability company that 

was formed in March 2022 to facilitate development of, among other things, the Fuse platform.  

Respondent has never been registered with the Commission in any capacity and has never had any 

securities registered with the Commission. 

 

 
1 The findings herein are made pursuant to Respondent’s Offer of Settlement and are not binding 

on any other person or entity in this or any other proceeding. 

 



 

 

 

3 

Other Entity 

5. Rari Capital, Inc. (“Rari Capital”) is a Delaware corporation principally based in 

Los Angeles, California and created in June 2020 by three co-founders.  Rari Capital created the 

Fuse platform and operated the web-based user interface that enabled users to access and interact 

with the smart contracts underlying the Fuse platform, among other things.  Rari Capital has never 

been registered with the Commission in any capacity and has never had any securities registered 

with the Commission. 

Facts 

6. Rari Capital created and launched the Fuse platform in March 2021.  The Fuse 

platform allowed individual users to create unique pools to facilitate the depositing and borrowing 

of crypto assets, including crypto assets offered and sold as securities.  The Fuse platform enabled 

pool creators to customize the depositing and borrowing parameters for the pools, such as the types 

of crypto assets that could be deposited and lent, fee amounts, interest rate curves, and collateral 

requirements.  After creating a pool on the Fuse platform, the pool creator retained administrator 

rights to alter the parameters for the given pool, sometimes referred to as a “liquidity pool.”  

Meanwhile, Fuse users could make deposits into any Fuse pool.   

7. The Fuse platform was based on a set of smart contracts created by Rari Capital that 

were deployed and run on the Ethereum blockchain, and that held the crypto assets deposited by 

Fuse platform users.  Rari Capital also developed and provided a web-based user interface that 

enabled users to access and interact with the smart contracts underlying the Fuse platform.  Through 

the Fuse platform, users could either deposit crypto assets into a pool and earn their respective share 

of interest on borrowing activity in that pool, or, after depositing collateral, borrow from a pool by 

withdrawing other crypto assets.  For each specific Fuse pool, the smart contracts pooled together 

the crypto assets deposited by users into that pool, and made those crypto assets available for 

borrowing from that pool.  Users who borrowed crypto assets paid interest, which funded returns to 

the users who deposited the crypto assets in the pool.  Users who deposited the crypto assets 

received a token, at times called an “fToken” and tradeable on secondary crypto asset trading 

platforms, that evidenced their interest in their specific Fuse pool and their right to receive a pro rata 

share of the interest earnings.  

8.  Through the smart contracts created by Rari Capital, Fuse received depositing and 

borrowing transaction instructions from users and executed those instructions, if the conditions for 

such requests were met within a given Fuse pool.  Rari Capital, through permissions it established in 

the Fuse platform’s smart contracts, maintained the ability to shut down the platform, replace the 

platform’s underlying smart contracts, and revoke the pool creators’ administrator rights.   

9. Through Rari Capital’s public website, social media channels, and direct 

communications, Rari Capital and its employees solicited users to deposit crypto assets into and 

borrow crypto assets from the pools on the Fuse platform.  Rari Capital also promoted Fuse and 

specific Fuse pools by highlighting the purportedly high annual percentage yields associated with 

certain pools. 



 

 

 

4 

10. In addition, Rari Capital and its employees engaged in certain services to support 

depositing and borrowing on the Fuse platform.  For example, Rari Capital assigned a “Rari Safety 

Score,” graded from A to F, to each Fuse pool that purported to provide a risk assessment of each 

pool.  Fuse users could view these “Rari Safety Scores” on both the platform’s user interface and 

Rari Capital’s website.  Rari Capital also created and administered several of the larger Fuse pools.  

11. For its services, Rari Capital charged a performance-based fee of approximately 10 

percent on the interest earned in each Fuse pool.  Interest earned in each pool depended on the 

interest rate curve selected by the pool creator and fluctuated based on the depositing and borrowing 

transactions within a given pool.  A smart contract created by Rari Capital automatically calculated 

these fees, and once accrued, Rari Capital maintained the authority to collect them.  Rari Capital at 

times exercised this authority and collected fees.  

12. Starting in December 2021, the co-founders of Rari Capital took less active roles in 

developing the Fuse platform.  In March 2022, certain other Rari Capital personnel created 

Respondent separately from Rari Capital and its co-founders to operate and further develop the Fuse 

platform.  This change in leadership was completed in June 2022, when the CEO of Rari Capital 

resigned.  Respondent and its employees solicited users over the internet to deposit and borrow 

crypto assets on the Fuse platform.  Respondent also obtained the ability to shut down the platform, 

replace the platform’s underlying smart contracts, and revoke the pool creators’ administrator rights.  

Respondent operated and developed the Fuse platform with the same services and features 

described above, including the assignment of letter grades to pools, the administration of several 

larger Fuse pools, and the collection of fees from interest accrued from depositing and borrowing 

activity on the Fuse platform.  

13. In May 2022, a malicious actor exploited the code of the Fuse platform and stole 

crypto assets purportedly having a market value of approximately $80 million.  Soon after the 

exploit, Respondent halted new depositing activity on the Fuse platform, began winding down 

operations, and provided reimbursements to users harmed in the exploit.  Ultimately, Respondent 

used the approximately $2.32 million of performance-based fees it had collected from the pools to 

compensate Fuse users and suspended its operation of the Fuse platform. 

14. At Fuse’s peak, the smart contracts for the Fuse platform held crypto assets 

purportedly having a market value of approximately $1 billion.  Over the life of the Fuse platform, 

approximately 180 Fuse pools were created and over 10,000 users used the platform at one time or 

another. 

15. The crypto assets that were deposited and borrowed on the Fuse platform included 

those that were offered and sold as investment contracts, and thus securities, under SEC v. W.J. 

Howey Co., 328 U.S. 293 (1946). 

16. Respondent never registered as a broker with the Commission or operated pursuant 

to any exception or exemption from registration. 



 

 

 

5 

17. No registration statement was filed or in effect for Respondent’s offers and sales of 

Fuse pool interests, nor were any exemptions from registration available. 

Violations 

18. Under Section 2(a)(1) of the Securities Act and Section 3(a)(10) of the Exchange 

Act, a security includes “an investment contract.”  See 15 U.S.C. §§ 77b(a)(1) and 78c(a)(10).  

Based on the facts set forth above, a user’s depositing of crypto assets into a Fuse pool in exchange 

for a token that evidenced the user’s interest in the pool and right to receive a pro rata share of the 

interest earned through the pool’s activity constituted the offer and sale of investment contracts.  See 

Howey, 328 U.S. at 301.  Investors in the Fuse pools tendered money, in the form of crypto assets, 

to the Fuse platform to participate in the Fuse pools.  Investors’ crypto assets were pooled and were 

made available for borrowing.  Users who borrowed assets paid interest to the specific pools that 

supported returns to the investors in those Fuse pools.  The returns earned by Fuse pool investors 

were a function of the pooling of the crypto assets deposited by investors and the ways in which the 

smart contracts deployed those assets.  In this way, each pool investor’s fortune was tied to the 

fortunes of the pool’s other investors.  In addition, because Respondent earned revenue for itself 

from interest paid by borrowers, the Fuse pool investors’ fortunes were also linked to those of 

Respondent.  Through its public statements and the economic structure of the Fuse pools, 

Respondent invited Fuse pool investors to reasonably expect that they would earn profits derived 

from the efforts of Respondent and others.   

19. Section 5(a) of the Securities Act states that “[u]nless a registration statement is in 

effect as to a security, it shall be unlawful for any person, directly or indirectly, (1) to make use of 

any means or instruments of transportation or communication in interstate commerce or of the mails 

to sell such a security through the use or medium of any prospectus or otherwise, or (2) to carry or 

cause to be carried through the mails or in interstate commerce, by any means or instruments of 

transportation, any such security for the purpose of sale or for delivery after sale.” 

20. Section 5(c) of the Securities Act states that “[i]t shall be unlawful for any person, 

directly or indirectly, to make use of any means or instruments of transportation or communication 

in interstate commerce or of the mails to offer to sell or offer to buy through the use or medium of 

any prospectus or otherwise any security, unless a registration statement has been filed as to such 

security.” 

21. As a result of the conduct described above, Respondent violated Sections 5(a) and 

5(c) of the Securities Act.   

22. Section 3(a)(4)(A) of the Exchange Act defines a “broker” as “any person engaged 

in the business of effecting transactions in securities for the account of others.”  Based on the 

conduct described above, Respondent was acting as an unregistered broker.  As a result, Respondent 

violated Section 15(a) of the Exchange Act, which, in relevant part, prohibits any broker from 

making use of the mails or any instrumentality of interstate commerce, to effect any transaction in, 

or induce or attempt to induce the purchase or sales of, any security unless the broker is registered in 



 

 

 

6 

accordance with Section 15(b) of the Exchange Act absent an applicable exemption or exception 

from registration.   

Respondent’s Cooperation and Remedial Efforts 

23. In determining to accept the Offer, the Commission considered the cooperation 

afforded the Commission staff by Respondent and Respondent’s remedial efforts to stop trading 

activity and wind down the Fuse platform following the May 2022 platform exploit, including 

Respondent’s voluntary return to harmed users of the performance-based fees that it had collected.   

IV. 

 In view of the foregoing, the Commission deems it appropriate to impose the sanctions 

agreed to in Respondent’s Offer. 

 

 Accordingly, it is hereby ORDERED that: 

 

 A. Pursuant to Section 8A of the Securities Act and Section 21C of the Exchange Act, 

Respondent cease and desist from committing or causing any violations and any future violations of 

Sections 5(a) and 5(c) of the Securities Act as well as Section 15(a) of the Exchange Act.    

 

 B. Respondent acknowledges that the Commission is not imposing a civil penalty 

based upon its cooperation in a Commission investigation.  If at any time following the entry of the 

Order, the Division of Enforcement (“Division”) obtains information indicating that Respondent 

knowingly provided materially false or misleading information or materials to the Commission, or 

in a related proceeding, the Division may, at its sole discretion and with prior notice to the 

Respondent, petition the Commission to reopen this matter and seek an order directing that the 

Respondent pay a civil money penalty.  Respondent may contest by way of defense in any 

resulting administrative proceeding whether it knowingly provided materially false or misleading 

information, but may not: (1) contest the findings in the Order; or (2) assert any defense to liability 

or remedy, including, but not limited to, any statute of limitations defense. 

 

 By the Commission. 

 

 

Vanessa A. Countryman 

Secretary