Ripple Distances Itself as Linqto Faces Bankruptcy and Federal Investigations

Ripple has taken decisive steps to distance itself from Linqto, emphasizing that the two companies have no direct business relationship. Brad Garlinghouse, Ripple’s CEO, stated that Linqto’s 4.7 million Ripple shares were acquired exclusively through secondary market transactions, not directly from Ripple.

This clarification comes amid rumors and misinformation about Ripple’s involvement in Linqto’s operations and financial distress.

Garlinghouse reiterated that Ripple has never participated in Linqto’s financing rounds and stopped approving secondary market purchases through Linqto in late 2024 due to mounting concerns.

By establishing a clear boundary, Ripple seeks to protect itself from regulatory consequences and reassure investors about the safety of its equity.

Speculation about Ripple’s exposure to Linqto’s troubles has intensified as bankruptcy proceedings and federal investigations progress.

Ripple’s public statements are intended to maintain trust and transparency during a period of heightened uncertainty.

Linqto’s Bankruptcy Filing and the Fallout for Investors

Linqto, a private investment platform specializing in pre-IPO shares, filed for Chapter 11 bankruptcy in the Southern District of Texas. The company cited operational challenges and alleged securities law violations as key reasons for its collapse.

Linqto’s CEO, Dan Siciliano, acknowledged significant flaws in the company’s structure and management, raising doubts about what customers truly own.

The bankruptcy comes after months of controversy, with federal investigations by the SEC and DOJ into Linqto’s sales practices and compliance failures.

Reports indicate that Linqto may have sold shares at inflated prices, failed to secure proper transfer permissions, and marketed securities to ineligible investors.

Despite these issues, Linqto insists that investor holdings, including the 4.7 million Ripple shares managed through its Liquidshares vehicle, remain secure and unchanged.

However, customer accounts remain frozen, and the platform’s operations are suspended pending legal resolution.

Did you know?
Linqto’s Liquidshares vehicle reportedly holds securities in over 100 private companies, with an estimated fair market value exceeding $500 million, making it one of the largest aggregators of pre-IPO shares in the United States.

Misinformation and Market Panic: Ripple and Linqto Respond

The bankruptcy announcement triggered a wave of speculation and misinformation, particularly on social media. Some posts falsely claimed that Linqto’s Ripple shares had changed hands or were at risk, fueling investor anxiety.

Both Linqto and Ripple responded swiftly to counter these rumors. Linqto issued multiple statements affirming that its Ripple holdings are intact, and Ripple confirmed that Linqto’s shares were never purchased directly from the company.

Linqto also warned customers to disregard unsubstantiated reports and threatened legal action against those spreading false information.

These coordinated communications are part of a broader effort to restore confidence among investors and prevent further destabilization in the private securities market.

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Regulatory Scrutiny Intensifies as Compliance Failures Emerge

Federal investigations into Linqto have uncovered widespread compliance lapses, including improper structuring of investment vehicles and unauthorized sales of securities.

The SEC and DOJ are examining whether Linqto violated securities laws by offering shares to unqualified investors and failing to disclose key risks.

Linqto’s former executives are also under scrutiny for allegedly inflating share prices and employing aggressive sales tactics.

These practices have drawn sharp criticism from regulators and industry observers, highlighting the risks faced by investors in the largely unregulated pre-IPO market.

The ongoing investigations are likely to shape future regulatory approaches to private securities platforms and may result in significant penalties or operational restrictions for Linqto and its affiliates.

The Future of Ripple Shares and Private Market Oversight

As Linqto undergoes court-supervised restructuring, the fate of its Ripple shares and other private equity holdings remains uncertain. While both companies have moved to reassure investors, the situation underscores the vulnerabilities inherent in private securities markets, where regulatory oversight is limited and transparency can be lacking.

Ripple’s decision to distance itself from Linqto reflects a broader trend among established companies seeking to avoid reputational and regulatory risks associated with troubled intermediaries.

The outcome of Linqto’s bankruptcy and federal investigations will likely influence how private market investments are structured and supervised in the years ahead.

For now, Ripple shareholders and Linqto customers face a period of uncertainty as legal proceedings unfold and regulators determine the extent of any wrongdoing.