According to Blockworks, the U.S. Securities and Exchange Commission (SEC) announced a settlement with crypto lending startup Rari Capital and its co-founders Jai Bhavnani, Jack Lipstone and David Lucid. The settlement requires court approval, but the amount was not disclosed.
The SEC alleges that the co-founders falsely claimed that the Earn pool would automatically rebalance crypto assets to maximize returns, but in reality it often required manual operations and Rari Capital sometimes failed to execute. The project also misleadingly claimed that investors would receive higher annual returns and did not disclose fees.
The SEC also charged Rari Capital and its co-founders with engaging in unregistered brokerage activities through their operation of the Fuse platform. The founders and Rari Capital settled with the SEC without admitting or denying the findings.
They agreed to a final judgment including a permanent injunction, a conduct ban, a civil penalty, disgorgement with prejudgment interest, and a five-year officer ban against the co-founders. The court has not yet approved the settlement. Rari also consented to the SEC’s cease and desist order without admitting or denying the findings.
The protocol merged with Fei Capital in 2021. In 2021, the hacker lost $80 million, and Fei offered a $10 million bounty to recover the assets.