Updated (July 8, 6:41 pm UTC): This article has been updated, including comments from Phil Haslett.
Linqto, a private investment platform that allows investors to buy stocks of the original public issuing company, has filed for Chapter 11 bankruptcy in the United States. The company holds 4.7 million shares of the chain purchased on the private market.
linqto Filed Bankruptcy in the U.S. District Court in the Southern District of Texas on Monday.
The document was published shortly after Ripple CEO Brad Garlinghouse clarified last week that Linqto owns 4.7 million high school ripple stocks but has no business relationship with the company.
“Besides Linqto is a shareholder, Ripple has never established a commercial relationship with Linqto and has not participated in our financing rounds,” Garlinghouse explain In X post.
No precise data on stock value
A Linqto spokesperson declined to provide information on when the company will buy ripple stocks in the secondary market.
Linqto’s Ripple stock is worth about $450 million, while the secondary market share price is $95.5 million, according to data from private market platform Forge.
However, it was filed in court on Tuesday statement Linqto’s private service offers vehicles, LiquidShares, holds securities among 111 issuing companies with “estimated fair market value of over $500 million”.
Ripple Secondares shares may be held in a reported $700 million bid offer, according to Phil Haslett, founder of Equityzen, one of the oldest and largest secondary markets in private companies.
“Ripol secondary stores are usually suspended, and the company completes its reported $700 million tender offer,” Haslett told Cointelegraph.
“Before the tender, we observed prices around $70 to $75 (chain reaction).
LINQTO representatives did not clarify the value of the company’s holdings of Cointelegraph’s ripple stock. Cointelegraph has not received a request from Ripple for comment at the time of publication.
Federal Investigation Report
Speculation about the potential bankruptcy of Linqto first appeared on June 30, when the Wall Street Journal Report It faces a federal investigation and a possible bankruptcy filing.
The report shows that internal investigations have presented evidence that “Linqto clients never own the securities they believe they have”.
Linqto also marketed its services to customers who may be eligible to buy shares in a private company in the first place, WSJ reported.
“Most of what we found about Linqto’s previous business practices was disturbing,” said Dan Siciliano, the new CEO of Linqto.
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Former CEO William Sarris reportedly tried to offer Corrugated shares to 11,000 Linqto’s 11,000 users at a price of at least 60% higher than the price paid, violating the Securities and Exchange Commission’s (SEC) ban on more than 10%.
Expected first day of hearing on Tuesday
Linqto’s first bankruptcy hearing is scheduled for Tuesday at 9:00 p.m. at UTC, including Chief Restructuring Officer Jeffrey Stein, Kate Mailloux of Epiq Corporate Crunducting and Ryan Hamilton, Senior Vice President of Debt Advisory and Restructuring at Jefferies.
A detailed note filed by the court on Tuesday, Linqto made clear that it failed to comply with the securities laws, which was the reason for the inappropriate construction of its series of limited liability companies and lacked transfer licenses for issuers like Ripple.
Linqto closed its platform on March 13, effectively ending its revenue operations. According to court documents, the SEC has notified the company of the ongoing investigation into potential violations of LINQTO and its branches.
Ripples distance from Linqto in 2024
According to Garlinghouse, Ripple stopped approving Linqto to purchase its secondary stock. The move comes as the Financial Industry Regulatory Authority (FINRA) completes its review of Linqto broker trader Linqto Capital.
Gene Zawrotny, former chief revenue officer of Linqto, also filed lawsuits against Linqto and major former executives Bill Sarris and Joe Endoso, alleging serious compliance failures and retaliation.
The news appeared the day after Linqto deny Capsign CEO Matt Rosendin alleges that changes in Liquid Shares holding rate.
“In contrast to the report released on X, Linqto confirmed that LiquidShares’ Ripple stock holdings remain unchanged, and as Ripple confirmed last week, Linqto continued to own 4.7 million shares.”
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