Linqto, a once-thriving private investment platform that aimed to provide everyday investors with access to pre-IPO technology companies, has filed for Chapter 11 bankruptcy. This filing has revealed a troubling possibility: customers may never have truly owned the shares they thought they were purchasing.
The bankruptcy petition was filed by the San Jose-based fintech firm in the Southern District of Texas on Monday, with assets and liabilities estimated to be between $500 million and $1 billion. In its disclosure, Linqto stated that more than 10,000 creditors might be impacted by this development.
Central to the turmoil is Linqto’s much-promoted access to private shares of renowned companies such as Ripple and CoreWeave. However, Tuesday’s court documents depict a darker scenario, claiming that “years of mismanagement” could have led the company to insolvency. Chief Restructuring Officer Jeffrey Stein noted that previous executives allegedly “knowingly failed to cure extensive and serious securities law violations” that date back to at least 2020.
Linqto, Inc. Files Chapter 11 Bankruptcy
BANKRUPTCY FILING ALERT
LINQTO, INC.
Chapter 11 – SOUTHERN DISTRICT OF TEXAS
Filed: July 7, 2025
Case No. 25-90187
Assets: $500M-$1B | Liabilities: $500M-$1B | Total Creditors: 10,001-25,000 | Industry: Professional,… pic.twitter.com/YAUQTrpZQA
— RK | Consultants (@_RKConsultants) July 8, 2025
SEC Investigates Linqto Over Misleading Retail Sales of Ripple ‘Units’
Linqto’s offerings included secondary market shares of Ripple Labs, with the company claiming to hold 4.7 million shares through its investment arm, Linqto Liquidshares. This position could be valued at approximately $450 million at the current market prices. However, concerns regarding real ownership status have raised alarms among investors.
Importantly, the recent bankruptcy filing revealed that Linqto structured its offerings through a series of limited liability companies, which did not possess necessary transfer permissions from issuers like Ripple. Ripple’s CEO, Brad Garlinghouse, publicly distanced the blockchain company from Linqto last week, emphasizing that while Linqto possesses the shares, there has never been a business relationship between the two entities.
“Aside from Linqto being a shareholder, Ripple has never had a business relationship with Linqto, nor have they participated in our financing rounds,” Garlinghouse stated. He added that Ripple halted approvals for Linqto purchases in late 2024 due to emerging concerns.
Understandably, there have been many questions from those who believed they were buying Ripple shares from Linqto, and what happens next. To be clear, on Ripple’s end:
What we know from our records is Linqto owns 4.7M shares of Ripple, solely purchased on the secondary market… https://t.co/XHstpwwmIL
— Brad Garlinghouse (@bgarlinghouse) July 2, 2025
In light of the growing confusion among investors, the U.S. Securities and Exchange Commission (SEC) has launched an investigation into whether Linqto allowed ineligible buyers to acquire securities and whether its previous leadership misled customers regarding the ownership of the shares, presenting them as direct investments instead of indirect “representative units” with ambiguous legal status.
The issue of ownership lies at the heart of the controversy. An internal inquiry conducted by the newly appointed CEO, Dan Siciliano, uncovered disturbing practices from Linqto’s past management that may have misrepresented what customers were actually purchasing. Siciliano remarked to his staff, “Much of what we discovered about the prior business practices at Linqto is disturbing… These practices aren’t small one-off compliance or common regulatory missteps.”
Linqto Collapse Shakes Faith in Retail Access to Private Equity
The signals of Linqto’s impending collapse were first observed on June 30, when The Wall Street Journal reported that the company was under federal investigation and possibly facing bankruptcy.
The report cited internal communications suggesting that customers never owned the securities they believed they purchased. Further scrutiny has been directed at the company’s former leadership, notably former CEO William Sarris, who allegedly attempted to sell Ripple shares to Linqto’s 11,000 users at a markup exceeding 60%, contravening SEC regulations that restrict such increases to no more than 10%.
Although Sarris resigned, he remains on the company’s board, while former Chief Revenue Officer Gene Zawrotny departed from Linqto and subsequently filed a lawsuit highlighting significant compliance failures and retaliation issues.
Currently, Linqto is under bankruptcy protection and is working on a restructuring plan. The company has appointed Jeffrey Stein, an expert in restructuring, to oversee the turnaround process and has engaged several firms, including Triple P TRS, LLC, and Epiq Corporate Restructuring, for legal and administrative assistance. The goal is to negotiate with the SEC and other regulators to settle any outstanding debts and litigations equitably.
Refunding profitable investments through Linqto may let the platform retain investor gains, attorney @JohnEDeaton1 warns.#Linqto #Circlehttps://t.co/5CaGEbo0Sk
— Finance Newso.com (@Finance Newso) June 30, 2025
The repercussions of this situation are already being felt across the alternative investment space. Linqto’s initial promise to democratize access to private markets attracted thousands of retail investors eager to get in on early-stage startups.
However, the platform ceased operations on March 13, eliminating all revenue streams. Many investors are now faced with the disheartening realization that the shares they believed they owned may have merely been an unfulfilled promise, one that has essentially evaporated into the bankruptcy proceedings.
As Garlinghouse noted, “I have no idea how Linqto managed the participants to whom they sold ‘representative units’ of Ripple shares… I can’t provide any reassurance about Linqto’s business practices or how they will handle it now.”
True to our long-standing compliance roots, @Ripple is applying for a national bank charter from the OCC. If approved, we would have both state (via NYDFS) and federal oversight, a new (and unique!) benchmark for trust in the stablecoin market.
Earlier in the week via… https://t.co/IdiR7x3eWZ
— Brad Garlinghouse (@bgarlinghouse) July 2, 2025
Despite the uncertainty, Garlinghouse pointed out that the underlying value of Ripple shares has risen and suggested that “there should be considerable gains on those shares for ‘Linqto unitholders.’” However, the fate of those unitholders and whether they will realize any gains or compensation is contingent on the outcomes of the ongoing bankruptcy proceedings.
The first hearing for Linqto is scheduled for Tuesday, potentially offering insight into the extent of damage and the prospects for recovery within the troubled firm.
The post “You Never Owned the Shares”: Linqto Bankruptcy Exposes Pre-IPO Illusion appeared first on Finance Newso.
