According to Blockworks, the Securities and Exchange Commission (SEC) announced a settlement on Wednesday with crypto lending startup Rari Capital and its co-founders Jai Bhavnani, Jack Lipstone, and David Lucid. The settlements, which are subject to court approval, do not disclose a financial sum. The SEC alleges that the co-founders misled investors by claiming that the Earn pools would automatically and autonomously rebalance their crypto assets into the highest yield-generating opportunities available. In reality, the rebalancing mechanism often required manual input, which Rari Capital sometimes failed to initiate. Additionally, the project claimed that investors would receive a higher annual percentage yield without disclosing fees that would reduce the initial yield. The SEC also alleges that Rari Capital and its co-founders engaged in unregistered broker activity through their operation of the Fuse platform. The founders and Rari Capital, without admitting or denying the investigation’s findings, settled with the SEC. 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 order 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.