The U.S. Securities and Exchange Commission (SEC) has filed a lawsuit against Linus Financial, Inc., a Nashville-based company. reached an agreement with Linus Interest Accounts, a crypto lending product. The SEC’s decision ensured that Linus Financial was not penalized. Here are the details…
SEC announces decision for this crypto company
Linus Financial introduced Linus Interest Accounts in March 2020, promising to pay interest while allowing US investors to convert fiat currency into cryptocurrency assets. However, the SEC categorized these accounts as securities. Thus, it forced registration, which Linus Financial did not complete. Linus Financial stopped offering these accounts to potential investors on March 25, 2022, after this oversight was detected. They have also introduced a process that allows existing investors to withdraw their investments by the end of April 2022, providing a full refund.
While accountability remains important, Stacy Bogert, associate director of the SEC’s enforcement division, emphasized that the SEC wants companies to cooperate and promptly correct errors. “Today’s settlement serves as a vital reminder of the importance of collaboration and correction,” Bogert said. In addition to its dealings with Linus Financial, the Commodity Futures Trading Commission has issued warnings to other participants in decentralized finance protocols. At a time when critics argue that the SEC uses enforcement actions as a tool to shape policy rather than create clear laws, the agency’s approach in the Linus Financial case stands out.
Latest developments in the SEC ecosystem
This development comes amid ongoing debate over the SEC Stabilization Act, which aims to restructure the agency and potentially oust its current chairman, Gary Gensler. In conclusion, the Linus Financial case offers a new perspective on the broader debate regarding cryptocurrency regulation. Meanwhile, the latest blow to the SEC came when an appeals court cited inconsistencies in its reasoning for rejecting a Bitcoin exchange-traded fund conversion requested by Grayscale. The SEC has previously approved ETFs based on Bitcoin futures.
cryptocoin.com As we reported, Senator Warren Davidson (R-OH) has renewed calls for Gensler to resign. An even bigger blow was the SEC’s loss to Ripple. The preliminary court decision challenged the SEC’s broad assertion that most cryptocurrencies are securities. The court ruled that XRP is not a security when sold to investors on an exchange, marking a major win for the industry. While the courtroom drama is far from over, an eventual defeat in the Ripple case could be devastating for the SEC. More importantly, each negative decision seems to reveal flaws in the SEC’s legal theories and enforcement strategies under Gensler.
