Investment firm Linqto, a significant shareholder in blockchain company Ripple, has filed for Chapter 11 bankruptcy protection. This development follows federal investigations scrutinizing the firm’s operational practices and regulatory compliance in private securities markets.
Linqto holds approximately 4.7 million Ripple shares acquired through secondary market transactions, representing an estimated $450 million valuation based on current share prices. Federal authorities allege the firm misled investors and violated SEC regulations by imposing markups exceeding the permitted 10% limit on securities transactions.
Ripple has formally distanced itself from Linqto, halting share acquisitions from the firm in late 2024. The cessation coincided with mounting regulatory pressures and internal disputes within Linqto regarding executive compensation.
The bankruptcy underscores systemic regulatory challenges in private securities markets handling crypto assets. Key restructuring advisors and personnel will testify during upcoming bankruptcy hearings examining Linqto’s compliance failures and operational practices.