Ripple ($XRP) is once again entangled in legal drama, this time involving investment platform Linqto, the U.S. Securities and Exchange Commission (SEC), and the Department of Justice (DoJ). A bombshell *Wall Street Journal (WSJ) report reveals that Linqto allegedly skirted securities laws by offering retail investors early access to pre-IPO shares of major startups—including Ripple—without proper compliance.
Ripple CEO Sets the Record Straight
According to the report, Linqto acquired Ripple’s private shares on the secondary market and resold them to non-accredited investors, even allegedly dealing with individuals in sanctioned countries at inflated prices. Shockingly, many buyers were reportedly unaware that they didn’t actually own Ripple shares directly. Instead, they held stakes in a Special Purpose Vehicle (SPV), a legal entity that technically owns the shares.
Former U.S. lawmaker and crypto advocate John Deaton called the situation a "regulatory nightmare,"noting that around 5,000 non-accredited investors were caught in the scheme.
Ripple CEO Brad Garlinghouse swiftly distanced the company from Linqto, clarifying that Ripple had no direct involvement. He confirmed that Linqto had acquired 4.7 million Ripple shares from early investors, which had surged in value over time. However, due to increasing concerns, Ripple reportedly blocked Linqto from secondary market trading in 2024.
Ripple Shares vs. XRP: A Critical Distinction
While XRP remains a separate digital asset, Ripple’s private shares have skyrocketed 320% year-over-year, now valued at $91 per share (Hiive data). Deaton also revealed that other high-profile firms like Circle, Kraken, Anthropic AI, and SpaceX had shares listed on Linqto, raising broader regulatory questions.
Amid investor panic, Deaton reassured stakeholders that their investments would be prioritized in any potential bankruptcy proceedings. The case continues to unfold, leaving many wondering whether affected investors will ever recover their funds.
Will justice prevail, or will this become another cautionary tale in the wild world of crypto investing Stay tuned as the legal battle heats up.
(Only for Education perpouse not financial advice.)