Due to Linus Financial, Inc.’s failure to register the offers and sales of its cryptocurrency loan product, known as the Linus Interest Accounts, the Securities and Exchange Commission (SEC) has settled charges with the company. Due to the Nashville-based company’s cooperation and prompt corrective action, the SEC decided not to levy civil fines on it.
The offer and selling of the Linus Interest Accounts in the United States were started by Linus Financial around March 2020, according to information from the SEC’s ruling. These accounts gave American investors the option to give cash to Linus Financial in exchange for an interest payment guarantee.
The corporation then transformed this money into cryptocurrency assets, pooled them, and decided how to use them to make money for the business as well as to pay interest to investors. These accounts have been classified as securities by the SEC order. Furthermore, it argues that Linus Financial was required to register these offers and transactions since they did not meet the requirements for an exemption from SEC registration.
After the SEC filed charges against a similar crypto asset investment scheme on March 25, 2022, Linus Financial voluntarily stopped marketing the Linus Interest Accounts to new customers. Additionally, the business asked that existing investors withdraw their money by the end of April 2022. As of right now, all investment funds have been reimbursed.
“The SEC remains committed to ensuring companies comply with federal securities laws,” said Stacy Bogert, Associate Director of the SEC’s Division of Enforcement. We also want to encourage businesses to work together and take fast corrective action when anomalies are found. The present settlement makes it plain to other market participants how important cooperation and correction are.
Linus Financial has agreed to a cease-and-desist order without admitting or disputing the SEC’s findings. This ruling prevents the company from violating the Securities Act of 1933’s registration requirements.
Under the direction of Pei Y. Chung and Ms. Bogert, Randall D. Friedland and Brittany K. Frassetto led the investigation into this situation.
An Investor Bulletin on Crypto Asset Interest-bearing Accounts was previously produced by the Retail Strategy Task Force of the SEC’s Office of Investor Education and Advocacy and Enforcement for those who are interested in learning more about cryptocurrencies.