Liquidity.io Docs

Liquidity.io LLC is a registered broker-dealer operating under SEC regulations. All secondary trading of private securities requires compliance with the Securities Act of 1933 and applicable state "blue sky" laws.

Reference document: Secondary Private Resale Disclosure and Investor Acknowledgment

Accreditation Enforcement

Primary Market (BUY orders)

Asset `accreditationType`	Requirement	Verification
`506c` (Reg D)	Verified accredited ONLY	Simplici third-party verification, `accreditationStatus === 'completed'`
`506b` (Reg D)	Self-certified accredited	Self-certification via Simplici, `accreditationStatus === 'completed'`
`Retail` / `null`	No accreditation needed	--

Code Enforcement Points

All order creation paths are gated:

Path	Service	File
Standard orders	exchange.api	`src/services/orders/service.ts` -- create()
Order modifications	exchange.api	`src/services/orders/service.ts` -- update()
Pre-IPO orders	exchange.api	`src/services/pre-ipo-orders/service.ts` -- create()
Bulk orders	exchange.api	Routed through orders.create()

Fail-closed: If buyer details cannot be fetched, the order is rejected. Per Disclosure 1.2: "the Firm may decline to participate in any transaction if such information is not provided to its satisfaction."

Implementation Detail

// Asset-level accreditation gate (orders/service.ts)
const ACCREDITED_ASSET_TYPES = ['506b', '506c'];
const assetAccrType = assetExists?.accreditationType;

if (assetAccrType && ACCREDITED_ASSET_TYPES.includes(assetAccrType)) {
  const buyerDetails = await RegCFBuyerEligibility.fetchBuyerDetails(userId, requestId, req);
  const isAccredited =
    ACCREDITED_ASSET_TYPES.includes(buyerDetails?.accreditationType ?? '') &&
    buyerDetails?.accreditationStatus === 'completed';

  if (!isAccredited) {
    return new BadRequest(
      `This asset requires ${assetAccrType} accreditation.`
    );
  }
}

Resale Restrictions

Default 12-Month Hold

Securities issued under Reg D and Reg CF are subject to a 12-month holding period. Enforced via restriction_end_date on sell order lots (FIFO tracking).

Resale Exemptions

Regulation	Exemption	Status
Reg D 506(b/c)	Unsolicited sale to accredited investors within 1 year	Enforced -- restricted lots require accredited buyer
Reg CF	Non-accredited can sell to accredited within 1 year	Enforced -- `isRestrictedOrder=true` requires accredited buyer
Reg CF	Family member exemption (estate, gift, divorce)	Not yet implemented
Reg S	Free trading among non-US investors	Not yet implemented -- no geofencing
Reg S	Block US investor purchases during 1-year distribution	Not yet implemented -- no geofencing

RegCF Investment Limits

Non-accredited investors are subject to SEC Reg CF investment caps:

Maximum of the greater of $2,500 or 5% of annual income/net worth
Accredited investors have no investment limit
Enforced via RegCFBuyerEligibility.checkInvestmentLimit()

Disclosure Requirements

Currently Enforced

Accredited investor verification at each transaction (Disclosure 1.1)
Fail-closed on verification failure (Disclosure 1.2)
Transfer restriction enforcement via restriction dates (Disclosure 2.2)
Portfolio ownership validation for sellers (Disclosure 9.1)

Future Implementation Needed

Signed disclosure acknowledgment before each secondary trade (Disclosure 11.1)
ROFR / issuer consent check at order creation time (Disclosure 5.2)
Reg S geofencing -- US vs non-US investor determination
Investor sophistication assessment beyond KYC

Bug History

Accreditation Bypass (Fixed 2026-03-18)

Root cause: Check only ran for RegCF offering type; RegD 506b/506c assets unguarded
Fix: Independent asset-level gate on all offering types
PRs: #2862 (dev), #2863+#2865 (alpha), #2864+#2866 (next)

Dividend Mislabeling (Fixed 2026-03-18)

Root cause: Disbursements used fortress ledger (INTERNAL) instead of disbursement-ledger (DISBURSEMENT)
Fix: Route through disbursement-ledger with DISBURSEMENT_TRANSFER signal

Pre-IPO Bypass (Fixed 2026-03-18)

Root cause: pre-ipo-orders endpoint had zero accreditation validation
Fix: Added same accreditation gate before Order.create()

E2E Test Coverage

Test	File	What it validates
Accreditation gate (API)	`universe/e2e/23-accreditation-guard.spec.ts`	Unaccredited BUY on 506b/506c -- rejected
Pre-IPO gate (API)	Same file	Unaccredited pre-IPO BUY -- rejected
Dividend labels (API)	`universe/e2e/24-dividend-labels.spec.ts`	No INTERNAL transactions with DISBURSEMENT metadata
Dividend labels (UI)	Same file	Wallet shows "Dividend" label

Run:

E2E_BASE_URL=https://exchange.next.satschel.com npx playwright test e2e/23 e2e/24

Regulatory Compliance