Linus 4.5% — what is this?

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FusilliJerry
Posts: 6
Joined: Thu Jun 08, 2017 1:27 pm

Linus 4.5% — what is this?

Post by FusilliJerry »

Heard an ad for them on the radio.

https://www.getlinus.io/

Their site tells you that your investment is not protected by FDIC/SIPC.

It sounds like they are investing in higher risk loans? They say they have up to 150% collateral.

I’m not sure, can someone clarify the risk here?

Thanks!
Johm221122
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Re: Linus 4.5% — what is this?

Post by Johm221122 »

Google showed this
As a Linus customer, you are more like an investor than a depositor. Linus can’t offer any guarantees that your money will be safe.
https://thecollegeinvestor.com/33385/linus-review/
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JoMoney
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Re: Linus 4.5% — what is this?

Post by JoMoney »

This looks dodgy to me. The fact that it's explicitly NOT insured by FDIC makes it no better (and likely a lot worse) then some junk bond.
From the small print, it looks like it has something to do with 'supplying liquidity pools' to online bit-coin/crypto-currency traders.
"To achieve satisfactory investment results is easier than most people realize; to achieve superior results is harder than it looks." - Benjamin Graham
typical.investor
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Joined: Mon Jun 11, 2018 3:17 am

Re: Linus 4.5% — what is this?

Post by typical.investor »

FusilliJerry wrote: Mon Oct 19, 2020 8:26 am Heard an ad for them on the radio.

https://www.getlinus.io/

Their site tells you that your investment is not protected by FDIC/SIPC.

It sounds like they are investing in higher risk loans? They say they have up to 150% collateral.

I’m not sure, can someone clarify the risk here?

Thanks!
150% collateral means what?

Given that much of it will be cryptocurrencies or related assets, I’d say not a whole lot.
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SmileyFace
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Re: Linus 4.5% — what is this?

Post by SmileyFace »

A famous Warren Buffet quote is "Never invest in a business you cannot understand".

I apply this to all my investments and this one certainly doesn't pass the test. There are too many open questions (most posed in the review upthread).
An investment that converts you dollars into crypto - then does some lending based upon crypto - has some type of unspecified collateral - has no guarantees but proposes an expected rate of return. Then they try to spin the whole scheme like it's a savings account to try to make the risk sound low. It's possible I am missing something but since I don't understand it all I am staying away.

I got a chuckle out of some of the quotes on their website:
""I've been in financial services most of my professional career. Linus is the simplest way to earn interest I've ever seen."
It's great they make is "simple". Time will tell if you actually earn interest or lose your principal.

"I feel better knowing my money is working harder for me than in a regular savings account. Thanks Linus!"
I wouldn't feel better not knowing whether my "Savings" will actually be there a year from now.

Then there are all the claims on current yield such as:
""I'm currently earning 3.5% APY on my deposit with @getlinus. Go to getlinus.io to #getLinus today""
Of course we all know that "today's" rate is guarenteed tomorrow - and unlike a savings account - your principal being held intact isn't guaranteed either.
humblecoder
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Re: Linus 4.5% — what is this?

Post by humblecoder »

DaftInvestor wrote: Mon Oct 19, 2020 9:45 am A famous Warren Buffet quote is "Never invest in a business you cannot understand".
I went to the web site and read the "How it works" page:
https://help.getlinus.io/en/articles/36 ... linus-work

After reading it, I still have no clue how it works. I suppose you could just give them money, potentially earn 4.5% interest, and not worry about where the money is coming from.
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ccf
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Re: Linus 4.5% — what is this?

Post by ccf »

There are a few leaps of faith that you have to take to use something like this. One that might not be so obvious is that your deposits are held in USD Coin (https://www.circle.com/en/usdc) and not dollars.
rich126
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Re: Linus 4.5% — what is this?

Post by rich126 »

I get concern when I check reviews on a website/company and all 18 reviews are "Excellent".

They seem to invest in real estate and have "co-investors". I'm assuming they are lending money to these "coinvestors" at rates above 4.5%.
Linus Capital is an innovative investment company that offers high net worth individuals, family offices and institutional investors access to selected, off-market real estate investments. Linus acts as an anchor investor and secures projects in which registered investors can invest via the online platform www.linus-capital.com. Linus is registered as a capital management company with BaFin.
https://www.linus-capital.com/en/about
typical.investor
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Re: Linus 4.5% — what is this?

Post by typical.investor »

rich126 wrote: Mon Oct 19, 2020 1:43 pm I get concern when I check reviews on a website/company and all 18 reviews are "Excellent".

They seem to invest in real estate and have "co-investors". I'm assuming they are lending money to these "coinvestors" at rates above 4.5%.
Linus Capital is an innovative investment company that offers high net worth individuals, family offices and institutional investors access to selected, off-market real estate investments. Linus acts as an anchor investor and secures projects in which registered investors can invest via the online platform www.linus-capital.com. Linus is registered as a capital management company with BaFin.
https://www.linus-capital.com/en/about
Not sure that’s the same as the OP posted though which is putting the funds into cryptos that people can then borrow.
rich126
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Re: Linus 4.5% — what is this?

Post by rich126 »

typical.investor wrote: Mon Oct 19, 2020 5:18 pm
rich126 wrote: Mon Oct 19, 2020 1:43 pm I get concern when I check reviews on a website/company and all 18 reviews are "Excellent".

They seem to invest in real estate and have "co-investors". I'm assuming they are lending money to these "coinvestors" at rates above 4.5%.
Linus Capital is an innovative investment company that offers high net worth individuals, family offices and institutional investors access to selected, off-market real estate investments. Linus acts as an anchor investor and secures projects in which registered investors can invest via the online platform www.linus-capital.com. Linus is registered as a capital management company with BaFin.
https://www.linus-capital.com/en/about
Not sure that’s the same as the OP posted though which is putting the funds into cryptos that people can then borrow.
I'm not sure but I find it curious they share the same "Linus" name. Might just be a coincidence or maybe not. My quick search proved fruitless.
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dziuniek
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Re: Linus 4.5% — what is this?

Post by dziuniek »

Sounds like Bernie Madoff 2.0
Nummerkins
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Re: Linus 4.5% — what is this?

Post by Nummerkins »

They are making money by using some crypto backed assets, similar to BlockFi and others. There was another thread on here recently about this.
Today's high is tomorrow's low.
protagonist
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Re: Linus 4.5% — what is this?

Post by protagonist »

I think it is pretty fair to say that anybody offering a safe 4.5% return today with no catch is selling something pretty sketchy. I wouldn't even bother reading any further.
z3r0c00l
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Re: Linus 4.5% — what is this?

Post by z3r0c00l »

I am pretty skeptical by nature, as there is a huge incentive for fraud when it comes to money. (What else is so easily/widely stolen?) [Disrespectful comment removed by moderator oldcomputerguy]

Upon digging deeper and seeing the fact that this is all based on crypto coins, I would say it is either a speculative crypto scheme bound to fail, or worse, outright fraud meant to steal your money directly as is done with so much of the crypto world.

"Linus enables depositors to access decentralized, digital asset credit markets, without the need to ever touch digital assets. Linus takes care of that on your behalf.

Linus converts your cash deposits into USDC, and then moves them into digital asset credit markets, dubbed 'liquidity pools', which are powered by smart contracts (more on this below).

Ethereum
Powering hundreds of thousands of transactions per day worth billions of US Dollars, Ethereum is the foundational layer upon which Linus and the smart contract-based liquidity pools operate. All Linus digital asset transactions into and out of the liquidity pools are secured using the shared, distributed ledger of Ethereum blockchain."
softwaregeek
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Re: Linus 4.5% — what is this?

Post by softwaregeek »

Not necessarily a scam but certainly not like a bank CD. I’m not liking the risk/return on this one. I do work in the crypto industry and see this a lot.
inbox788
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Re: Linus 4.5% — what is this?

Post by inbox788 »

Nummerkins wrote: Mon Oct 19, 2020 8:04 pm They are making money by using some crypto backed assets, similar to BlockFi and others. There was another thread on here recently about this.
First off, the ".io" domain is British Indian Ocean Territory.

Next, here's the fine print at the bottom of the page (I've bolded a few notable items) :
Annual Percentage Yield (APY) Disclaimer. The Linus Annual Percentage Yields (APY) listed as of September 15, 2020 are variable and subject to change at our discretion at any time without notice. The calculation for APY depends on the supply of digital assets into liquidity pools based on the Compound protocol, and similar services, on the Ethereum blockchain that establishes money markets (the “liquidity pools”) and the demand for high yield interest loans from these liquidity pools.

High Yield Interest Rate Disclaimer. Linus does not set or control high yield interest rates in the liquidity pools. The currently displayed high yield interest rate on this website may be lower or higher than it was stated previously.

Virtual Currency Disclaimer. Virtual currency (cryptocurrencies like Bitcoin, its alternatives and other similar virtual currencies) is not considered legal tender in the United States and, as a result, is not supported by the U.S. government. Assets held through Linus are not subject to protection by the Federal Deposit Insurance Corporation (FDIC) or the Securities Investor Protection Corporation (SIPC).

Supply Digital Assets To Liquidity Pool Disclaimer. This website is a software and service developed by Linus Financial, LLC that enables U.S. residents in certain jurisdictions to use fiat currency to supply digital assets (e.g., cryptocurrencies) into the liquidity pool. Using Linus to earn a high yield interest rate may involve substantial risk of loss and is not suitable for everyone. Before accessing the liquidity pool through Linus to earn a high yield interest rate, you should ensure that the nature, complexity and risks inherent in doing so are suitable for your objectives in light of your financial circumstances. You may lose all of your funds by accessing the liquidity pool through Linus to earn a high yield interest rate. Linus reserves the right to reduce exposure to any asset or liquidity pool during periods when high yield interest rates are favorable through other services or platforms.

Historical high yield interest rate APY related to supplying fiat currency through Linus and historical high yield interest rates related to supplying digital assets to the liquidity pool are not an indicator, and should not be viewed as an indicator, that these high yields and interest rates, respectively, will be available to you in the future. Although loans obtained through the liquidity pool are over-collateralized by the digital assets supplied to it and monitored by third parties for liquidations, neither Linus nor the associated services can guarantee the extent to which future loans obtained from the liquidity pool are over-collateralized and that the liquidity pool will be monitored in the future. Furthermore, the developers of the associated services have no legal obligation to provide software development to the liquidity pools, and you should not expect that the services will provide software development to its liquidity pools now or in the future. We also cannot guarantee that the liquidity pools will have sufficient liquidity if overall demand for borrowings or withdrawals increase significantly or for any other reasons at the time of withdrawal of your funds.

Registration Disclaimer. Certain Linus services and products on this site are currently in development and may not available. Accordingly, registering for an account with Linus, and obtaining login credentials, should in no way be construed as confirmation that any or all services will become available to you.
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