DOJ Has Received Reports From Over 100 Tipsters to Pilot Whistleblower Program

DOJ Sees Tips Flow in Over First Month of Pilot Whistleblower Program

The U.S. Justice Department has begun building out its new pilot whistleblower program, and so far has received reports from more than 100 tipsters since it was launched last month, a senior department official said.

The highly anticipated cash-for-tips program, announced in March, was officially launched on Aug. 1. The department has named Patrick Gushue, a trial attorney in the money-laundering and asset-recovery section, as the program’s first acting director and has assembled a team of prosecutors from three divisions to staff it, according to Brent Wible, chief counselor in the Justice Department’s criminal division.

SEC Charges DeFi Platform Rari Capital and its Founders With Misleading Investors and Acting as Unregistered Brokers

The Securities and Exchange Commission today announced settled charges against Rari Capital, Inc., a supposed decentralized finance (DeFi) protocol, and its co-founders, Jai Bhavnani, Jack Lipstone, and David Lucid, for misleading investors and engaging in unregistered broker activity in connection with their operation of two blockchain-based investment platforms that, at their peak, collectively held crypto assets worth more than $1 billion. Rari Capital also settled SEC charges that it conducted unregistered offerings of three securities tied to those platforms. In a separate order, Rari Capital Infrastructure LLC, which took over operations from Rari Capital in 2022, settled charges that it engaged in unregistered securities offerings and unregistered broker activity.

According to the SEC’s complaint, Rari Capital offered two investment products, Earn pools and Fuse pools, which functioned like crypto asset investment funds, allowing investors to deposit crypto assets in lending pools, either managed by Rari (Earn) or user-created (Fuse), and earn returns from their investments. The SEC’s complaint alleges that investors in the pools received a token representing their interest in the pools and the right to receive profits earned by the pools. Certain Earn pool investors also received a governance token, called the Rari Governance Token, or RGT. By selling interests in these pools and RGT, the complaint alleges, Rari Capital conducted unregistered offers and sales of securities.

Gensler Says AI Risks Heartbreak Like Scarlett Johansson’s ‘Her’

Overuse of the same kinds of artificial intelligence systems by too many brokers and money managers could set the stage for future turmoil, according to Gary Gensler, chair of the US Securities and Exchange Commission.

The financial crisis of the future might come about if market players “were all relying on the same model, the same algorithm, the same data,” Gensler said in a Wednesday interview on Bloomberg TV with Alix Steel and Romaine Bostick.

Gensler, a film buff, likened the risk to the artificial intelligence bot featured in the film “Her,” in which the thousands of romantic partners of Scarlett Johansson’s character were left “heartbroken” when the system went offline. “I don’t want that to happen in the financial sector,” he said.

U.S. SEC’s Crypto Record Rebuked by Ex-Commissioner, GOP Lawmakers in Hearing

JThe U.S. Securities and Exchange Commission was hammered for two hours in a congressional hearing on Wednesday in which the witness list predominantly included agency critics, including former Commissioner Daniel Gallagher, who is now at Robinhood.

In a preview of what could come when all five SEC commissioners – including Chair Gary Gensler – face a full hearing of the House Financial Services Committee on Sept. 24, the agency took a rhetorical beating from most of Wednesday’s witnesses, all the Republican members and some of the crypto-friendly Democrats on the subcommittee holding a hearing entitled, “Dazed and Confused: Breaking Down the SEC’s Politicized Approach to Digital Assets.”

Cell Phones

A reader emailed:

“Last week a coworker arrived at the office early, saw rainwater pouring in through the ceiling, and texted the manager something along the lines of OMG we have water pouring through the ceiling.

She has now had to endure several calls from compliance and has to write a report detailing why she sent a text about company business.”

I’m sure this is exactly the kind of situation the investment act of 1933 was enacted to prevent.”

Yes this is how financial industry compliance works now.