Is my Linus deposit insured by the FDIC or SIPC?
It is not.
While we work with FDIC-insured banking partners to support our fiat operations, Linus is not a bank and does not offer FDIC insurance on deposits.
We would like to offer FDIC insurance in the future, but this process takes time. We do not see Linus being able to offer it in the short-to-medium term.
What happens if you shut down?
Customer funds are our number one priority and Linus does not ever use customer funds for operating capital. While we do not offer FDIC insurance, we are committed to making users whole in the event that we are forced to shut down.
Our plan in the unfortunate event Linus ceases operations is to provide our users with 3 months notice, allowing for ample time to withdraw funds and troubleshoot any issues with those withdrawals. If a user fails to withdraw during this time period, you would receive a check in the mail at the user's last known address.
How do you make sure borrowers repay?
Your deposit is protected from default using borrower collateral.
To borrow user funds, borrowers collateralize assets that they own, with the understanding that their assets can be liquidated to cover their positions in the event of default. Collateral value is in excess of the amount borrowed - 150% on average - so that borrowers have the incentive to repay. In the event that a borrower defaults, Linus has the ability to liquidate their collateral to make users whole.
Is there risk that my funds could be lost or stolen?
To generate excess returns where your bank cannot (or will not), your funds must be converted into stable digital assets, on which demand for your dollars is higher. Collateral is also in the form of digital assets.
Without getting too technical, public-private key pairs are involved when dealing with digital assets, of which someone - a person or multiple people - must have custody. For this custody, Linus works with a third-party custody partner who holds an insurance policy on the digital assets in their possession. This custody partner's insurance policy covers hacks, theft, and loss of funds. More details to come on this in the future.
Has a loss ever occurred?
No user has ever incurred a loss using Linus.