Linqto, a private investment platform in the U.S. and a shareholder of Ripple, has filed for Chapter 11 bankruptcy amid ongoing legal investigations and disputes.
This company offers retail investors the right to purchase shares in companies before going public, including Ripple; however, it has been embroiled in allegations of securities violations and is under strict regulatory scrutiny.
MAIN CONTENT
Linqto files for Chapter 11 bankruptcy due to legal issues related to private equity handling.
Ripple states it has no direct business relationship with Linqto, only a shareholder relationship exists.
U.S. regulatory agencies such as the SEC and the Department of Justice are investigating serious securities violations by Linqto.
What is Linqto and why did they file for bankruptcy?
Linqto is a private investment platform in the U.S., allowing retail investors to buy shares in companies before their IPO. The bankruptcy filing is due to serious legal issues related to business operations and violations of U.S. Securities and Exchange Commission (SEC) regulations.
Investigation results indicate that Linqto violated the sale of shares at prices exceeding permissible limits and failed to ensure legal ownership rights for investors, leading to ongoing investigations and disputes since early 2024.
How is Ripple involved in this case?
Ripple CEO Brad Garlinghouse confirms that the company has no direct business relationship with Linqto; Linqto is merely a shareholder holding Ripple shares. He emphasizes that Linqto has never participated in any funding rounds of Ripple.
Although Linqto holds 4.7 million shares of Ripple, estimated to be worth about $450 million in the secondary market, Ripple is not responsible for Linqto's activities and has declined to provide detailed comments on this event.
Linqto is not a business partner of Ripple and has not participated in any funding rounds of the company.
Brad Garlinghouse, CEO of Ripple, June 2024
What issues are the U.S. Securities and Exchange Commission (SEC) and legal agencies investigating?
The SEC accuses Linqto of marketing private investments to unqualified investors, selling Ripple shares at a premium exceeding the 10% regulatory limit, with some instances increasing by up to 60% over the initial purchase price.
This behavior is considered a serious violation of securities law, significantly affecting the rights of retail investors and raising many controversies in the private finance sector.
The violations are not minor but reflect a concerning reality in Linqto's previous business operations.
Dan Siciliano, new CEO of Linqto, March 2024
What legal and operational consequences have occurred with Linqto?
Linqto closed its platform on March 13, 2024, halting all revenue-generating activities. The company is under investigation by the SEC, the U.S. Department of Justice, and is being reviewed by FINRA regarding its brokerage branch operations.
Additionally, a former Linqto executive has sued the company for violating internal compliance regulations, putting investors at risk of becoming unsecured creditors during the lengthy restructuring process.
How is the restructuring process and the first bankruptcy hearing conducted?
The first bankruptcy hearing is scheduled for June 11, 2024, with participation from leading restructuring and financial consulting experts such as Jeffrey Stein, Kate Mailloux, and Ryan Hamilton.
Linqto states it is seeking a $60 million funding grant from Sandton Capital Partners to support restructuring. However, individual investors may lose direct ownership and stand among unsecured creditors.
What can we learn from the Linqto case?
The Linqto case warns about governance and compliance risks in the private investment sector that still has many legal loopholes. This also highlights the regulatory pressure on emerging financial platforms, especially in the cryptocurrency and blockchain sectors.
Investors should be cautious, demand transparency, and carefully assess legal risks when participating in loosely regulated investment types.
Frequently Asked Questions
What kind of company is Linqto? Linqto is a licensed private investment platform in the U.S., enabling retail investors to buy shares in private companies. Why is Linqto under investigation? The company is accused of violating securities regulations, selling shares at premium prices, and mis-marketing to the wrong investor audience. How is Ripple related to the Linqto case? Ripple confirms there is no direct business relationship; Linqto is merely a shareholder holding their stock. Will Linqto investors lose money? Investors may become unsecured creditors and have to wait through a lengthy restructuring process to determine their rights. What should be noted in the bankruptcy hearing? The hearing will clarify financial and legal issues while determining Linqto's next restructuring steps.
Source: https://tintucbitcoin.com/ripple-co-dong-linqto-nop-don-pha-san/
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