Linus Financial, Inc., a company offering retail crypto lending products, has reached a settlement with the Securities and Exchange Commission (SEC) over charges related to the failure to register its Linus Interest Accounts. The SEC, recognizing the company’s prompt remedial actions and cooperation with the investigation, has decided not to impose penalties on Linus.
While Linus Financial did not admit or deny the findings by the SEC, it has agreed to a cease-and-desist order that prohibits the violation of registration provisions outlined in the Securities Act of 1933.
According to the SEC, in 2020, Linus introduced the Linus Interest Accounts, allowing US investors to deposit dollars into the accounts, with the funds being converted to cryptocurrencies to generate interest. The SEC argues that these accounts were sold as securities but were not properly registered and did not meet the requirements for exemption from registration.
In response to charges brought against a similar product in March 2022, Linus suspended the offering to new investors and requested existing investors to withdraw their funds within weeks. The SEC confirms that all funds were successfully withdrawn.
Stacy Bogert, Associate Director of the SEC’s Division of Enforcement, emphasized the agency’s commitment to holding companies accountable for compliance with securities laws. However, Bogert also emphasized the importance of cooperation and prompt corrective actions. The settlement serves as a message to other market participants, underlining the significance of cooperation and remediation.
The decision not to impose monetary penalties in this settlement is considered atypical for the SEC.
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