Update (July 8 at 6:41 pm UTC): This article has been updated to include comments from Phil Haslett.
Linqto, a private investment platform that allows investors to buy shares in pre-initial public offering companies, has filed for Chapter 11 bankruptcy in the United States. The company holds 4.7 million Ripple shares bought on the private market.
Linqto filed for bankruptcy with the US District Court for the Southern District of Texas on Monday.
The filing came soon after Ripple CEO Brad Garlinghouse clarified last week that Linqto owns 4.7 million secondary Ripple shares but has no business relationship with the company.
“Apart from Linqto being a shareholder, Ripple has never had a business relationship with Linqto, nor have they participated in our financing rounds,” Garlinghouse said in an X post.
No precise data on the shares’ value
A spokesperson for Linqto declined to provide information on when the company purchased Ripple shares on the secondary market.
Based on data from the private market platform Forge, Linqto’s Ripple share holdings may be worth around $450 million at the secondary market share price of $95.5.
However, a court filing on Tuesday stated that Linqto’s private‑securities offering vehicle, Liquidshares, holds securities with an “estimated fair market value in excess of $500 million” in 111 issuing companies.
According to Phil Haslett, co founder of EquityZen, one of the oldest and largest secondary marketplaces for private companies, Ripple secondary shares are likely to be on hold amid its reported $700 million tender offer.
“Ripple secondaries are generally paused while the company completes its reported $700 million tender offer at $175 per share,” Haslett told Cointelegraph, adding:
“Before the tender, we observed prices around $70 to $75 per [Ripple] share.”
The Linqto representative did not clarify the value of the company’s Ripple share holdings to Cointelegraph. Cointelegraph had not received a requested comment from Ripple at time of publication.
Federal investigation reports
Speculation about Linqto’s potential bankruptcy first emerged June 30, when The Wall Street Journal reported it faced federal investigations and a possible bankruptcy filing.
The report suggested that an internal investigation has turned up evidence that “Linqto customers never owned the securities they thought they did.”
Linqto also allegedly marketed its services to customers who may not be eligible to buy stakes in private companies in the first place, the WSJ reported, citing an internal memo.
“Much of what we discovered about the prior business practices at Linqto is disturbing,” Linqto’s new CEO Dan Siciliano reportedly said, adding: “These practices aren’t small one-off, compliance or common regulatory missteps.”
Related: Who is Arthur Britto, the Ripple ‘ghost’ who just broke 14 years of silence?
Former CEO William Sarris reportedly tried to offer Ripple shares to Linqto’s 11,000 users at a price at least 60% higher than what it paid, violating the prohibition on markups above 10% by the US Securities and Exchange Commission (SEC).
First day hearing expected on Tuesday
Linqto’s first bankruptcy hearing is scheduled for Tuesday at 9:00 pm UTC, with witnesses including chief restructuring officer Jeffrey Stein, Kate Mailloux from Epiq Corporate Restructuring and Ryan Hamilton, senior vice president for debt advisory and restructuring at Jefferies.
A Tuesday court filing detailed that Linqto specifically failed to comply with securities laws by improperly structuring its series limited liability companies and lacked transfer permission from issuers like Ripple.
Linqto shuttered its platform on March 13, effectively ending its revenue operations. The SEC has since notified the company of an ongoing investigation into potential violations by Linqto and its affiliates, according to court filings.
Ripple distanced itself from Linqto in 2024
Ripple stopped approving Linqto purchases of its secondary shares in late 2024, according to Garlinghouse. The move came around the time the Financial Industry Regulatory Authority (FINRA) completed a review of Linqto’s broker-dealer arm, Linqto Capital.
Linqto’s former chief revenue officer, Gene Zawrotny, also filed a lawsuit against Linqto and key former executives Bill Sarris and Joe Endoso, alleging serious compliance failures and retaliation.
The news comes the day after Linqto denied allegations of changes to Liquidshares’ holdings of Ripple in response to an X post by CapSign CEO Matt Rosendin.
“Contrary to published reports on X, Linqto confirms that Liquidshares’ holdings of Ripple shares remain unchanged, and as confirmed by Ripple last week, Linqto continues to own 4.7 million shares,” Linqto said in its published statement.
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