SEC Settles Charges Against Linus Financial Over Unregistered Retail Crypto Lending Product

Securities and Exchange Commission
Author
Author
Sujha Sundararajan
About Author

Sujha has been recognised as 🟣 Women In Crypto 2024 🟣 by BeInCrypto for her leadership in crypto journalism.

Last updated: 
Why Trust Cryptonews
Cryptonews has covered the cryptocurrency industry topics since 2017, aiming to provide informative insights to our readers. Our journalists and analysts have extensive experience in market analysis and blockchain technologies. We strive to maintain high editorial standards, focusing on factual accuracy and balanced reporting across all areas - from cryptocurrencies and blockchain projects to industry events, products, and technological developments. Our ongoing presence in the industry reflects our commitment to delivering relevant information in the evolving world of digital assets. Read more about Cryptonews
Source: Getty Images

The US Securities and Exchange Commission (SEC) announced Thursday that it will settle charges against Tennessee-based fintech firm Linus Financial over sales of an unregistered cryptocurrency lending product.

The regulator declared that it will abstain from imposing civil penalties against Linus Financial due to the firm’s immediate cooperation and prompt remedial actions.

Linus Financial began to offer and sell its crypto lending product – Linus Interest Accounts – in the United States around March 2020. The product allegedly allowed investors in the US to bid US dollars in exchange for Linus’ promise to pay interest, the regulator wrote.

“Linus Financial converted investors’ cash into crypto assets, pooled the crypto assets, and controlled how the pooled assets were used to generate income for Linus Financial itself and for investors’ interest payments,” per SEC’s order.

The crypto lending product was sold as securities, which did not qualify for an exemption from SEC registration, it further noted.

However, shortly after the regulator announced charges against a similar crypto product last year, Linus Financial stopped offering its retail crypto lending product and asked investors to withdraw their funds, latest by April 2022.

According to the settlement agreement, Linus Financial agreed to a cease-and-desist order “without admitting or denying the SEC’s findings.”

Stacy Bogert, Associate Director of the SEC’s Division of Enforcement said that the regulator has been stringent in holding companies accountable for securities laws violations.

“But we also want to encourage companies to cooperate and take prompt corrective action when problems arise. Today’s settlement provides a valuable message to other market participants about the importance of cooperation and remediation.”

SEC’s Classification of Cryptos as Securities

The SEC sued two of the world’s largest exchanges – Binance and Coinbase – in June, alleging that they were operating as unregistered securities exchanges and offered trading in cryptocurrencies that should have been registered as securities.

The agency has been firm in its contention that most digital assets, except for Bitcoin (BTC) and Ether (ETH), are securities and subject to oversight. The SEC uses the “Howey Test” to determine if a digital asset is a security.

The SEC claims have brought significant uncertainty to the crypto industry, leading to delistings, decline in prices and pivoting business models.

However, the recent victory of Ripple against the SEC would possibly galvanize crypto exchanges and firms to resist the agency’s attempt to assert its authority over the industry.

Logo

Why Trust Cryptonews

2M+
Active Monthly Users Around the World
250+
Guides and Reviews Articles
8
Years on the Market
70
International Team Authors
editors
+ 66 More

Best Crypto ICOs

Discover trending tokens still in presale — early-stage picks with potential

Explore Our Tools

Smart tools made for everyday crypto users

Market Overview

  • 7d
  • 1m
  • 1y
Market Cap
$3,350,583,491,730
-0.61
Trending Crypto

More Articles

Blockchain News
Fintech Firm Fiserv Taps PayPal and Circle to Power Its Stablecoin Initiative
Shalini Nagarajan
Shalini Nagarajan
2025-06-24 04:32:16
Altcoin News
Senator Adam Schiff Moves to Ban Presidents and Families From Profiting Off Crypto
Amin Ayan
Amin Ayan
2025-06-24 02:50:20
Crypto News in numbers
editors
Authors List + 66 More
2M+
Active Monthly Users Around the World
250+
Guides and Reviews Articles
8
Years on the Market
70
International Team Authors