Linus Financial settles SEC charges for failing to register crypto lending product

Quick Take

  • The Securities and Exchange Commission said it determined not to impose civil penalties against Linus Financial because of its cooperation and prompt remedial actions.

Linus Financial, a Nashville-based crypto services firm, has settled with the U.S. securities regulator for allegedly failing to register the offer and sale of its retail crypto lending product.

The Securities and Exchange Commission announced the settlement, which focused on Linus’s crypto lending product, Linus Interest Accounts, on Thursday. It added that the agency decided not to impose civil penalties due to the company’s cooperation and prompt remedial actions.

An SEC order showed Linus Financial started to offer and sell its interest-bearing accounts in March 2020, allowing U.S. investors to tender fiat currency in exchange for Linus Financial’s promise to pay interest.

“The order finds that the Linus Interest Accounts were offered and sold as securities, and that the offers and sales did not qualify for an exemption from SEC registration. Therefore, Linus Financial was required to register its offers and sales of the Linus Interest Accounts,” the SEC said in the Thursday statement.

Heightened scrutiny

Stacy Bogert, associate director of the SEC’s division of enforcement, said in the statement that while the SEC will continue to hold companies accountable, “we also want to encourage companies to cooperate and take prompt corrective action when problems arise.”

THE SCOOP

Keep up with the latest news, trends, charts and views on crypto and DeFi with a new biweekly newsletter from The Block's Frank Chaparro

By signing-up you agree to our Terms of Service and Privacy Policy
By signing-up you agree to our Terms of Service and Privacy Policy

“Today’s settlement provides a valuable message to other market participants about the importance of cooperation and remediation,” Bogert added.

Also on Thursday, the Commodity Futures Trading Commission issued a stern warning to operators of decentralized finance protocols, stating that it had filed and settled charges against the Opyn, ZeroEx and Deridex platforms.


© 2023 The Block. All Rights Reserved. This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.

TAGS
SEC

About Author

Timmy Shen is an Asia editor for The Block. Previously, he wrote about crypto and Web3 for Forkast.News from Taiwan after spending more than three years in Beijing covering finance and current affairs at Caixin Global and Chinese tech at TechNode. His China-related reporting has also appeared in The Guardian. When he's not chasing headlines, you'll find him savoring hot pot and shabu shabu in a Taipei local haunt. Timmy holds an MS degree from Columbia University Graduate School of Journalism. Send tips to [email protected] or get in touch on X/Telegram @timmyhmshen.

Editor

To contact the editor of this story:
Ryan Weeks at
[email protected]