Major investment firm offering Ripple, Circle shares at risk of bankruptcy
Linqto, an investment firm that offers shares of private companies like Ripple, could file for a bankruptcy filing, the Wall Street Journal reported on June 30.
A San Francisco Bay Area-based investment platform, Linqto was founded by a couple, William and Vicki Sarris, in 2010. It maintains nearly $500 million on behalf of thousands of investors spread across the world.
The company allows customers to buy shares in privately held crypto companies like Ripple and Circle through pre-IPO shares (Circle (NYSE: COIN) made a well-received public debut only on June 4). These shares are sold before an initial public offering (IPO) over secondary markets.The WSJ reported that the Securities and Exchange Commission (SEC) and Justice Department are investigating Linqto's sales practices. It could be moving toward a possible restructuring through bankruptcy as per the new management, the report mentioned.
As per the WSJ, the investment platform engaged in potentially many unsound business practices under the leadership of the now-former CEO, William Sarris.
For instance, in January 2023, Linqto was trying to sell Ripple shares at a price at least 60% higher than what the firm paid; the customer base Linqto targeted then was 11,000 users.
Though the SEC generally doesn't allow markups above 10%, Sarris didn't care. The firm didn't inform its customers about the price hike and made $2 million, sources told the publication.
Ripple CEO Brad Garlinghouse said Linqto owns 4.7 million Ripple shares that it purchased over secondary markets and never directly from Ripple. Neither did Linqto ever have a business relationship with Ripple, nor did it ever participate in the crypto company's financing rounds, the CEO added.
Despite Linqto being a shareholder in Ripple, the crypto firm stopped approving more Linqto purchases on secondary markets in late 2024, Garlinghouse added.
The WSJ claims to have reviewed a memo as per which an outside law firm had warned Linqto that these transactions may have constituted securities fraud.As per an internal investigation at Linqto, its customers never owned the securities they thought they owned, and the company was marketing its products to investors who may not have been eligible to buy stakes in private companies.
The SEC allows only "accredited" investors, or those with a net worth of more than $1 million or an annual salary of more than $200,000, to trade private shares. The agency's assumption is such investors are sufficiently savvy to handle the associated risks.
To promote Ripple shares, Sarris asked his managers to use everything — influencer marketing, advertisements, social media, calls, etc. When an employee protested relying on promotional emails over concerns raised by internal lawyers, Sarris responded:
"Forget what legal says."
An email from Sarris dated Jan. 5, 2023, wrote:
"This is guerrilla warfare. Take no prisoners."
Sarris and his team sent emails creating FOMO among investors by indicating a short supply of shares even when they had plenty in store. The high demand would lead to price hikes, and the company would later send emails announcing a sudden new supply of shares, WSJ reported, citing emails it saw.
Linqto even bought email lists containing prospective customers from sanctioned countries such as Iran and North Korea, even if none bought any shares.
Thomas Lennon, 33, bought Ripple shares worth $10,000 in September 2024. He said, though it was a lot of money for him, it was a chance he was willing to take because "I wanted access to Ripple shares."
John Deaton, a popular pro-crypto lawyer, told the publication he bought private shares worth $495,000 through Linqto. He believes the company took advantage of unsophisticated investors if it marked up share prices.
The SEC and Justice Department are investigating whether Sarris sold an additional 16,000 Ripple shares without the permission of customers, sources told the publication.Linqto was among the pioneering investment firms to tap into the excitement among regular investors for high-value private companies like Ripple. The private stock trading platform it created operated with fewer rules and regulations than traditional markets.
Moody's Ratings warned that selling private investments to retail investors risks stressing the financial system, WSJ reported on June 10.
At company town halls, Sarris talked of Linqto becoming the next multibillion-dollar company in the financial services industry. In March 2025, he quit his CEO position, and the company acknowledged an internal investigation revealing "serious securities law violations."
Prior to his resignation, Sarris signed a memo in March alleging the new management was exaggerating the severity of securities laws violations at Linqto in order to seize control of the firm.
The new CEO, Dan Siciliano, said much of what they discovered about the prior business practices was disturbing. He added:
"These practices aren't small one-off, compliance or common regulatory missteps."
The WSJ reported that all of Linqto's customers, including those who bought Ripple and Circle shares, have been locked out of their investments they thought they owned due to the ongoing investigations.
Times ahead are going to be tough for Linqto customers who are unsure if they will even get their money back. If the company files for bankruptcy, as people close to the matter expect, its customers will likely become unsecured creditors who will be left waiting for the case to resolve in order to get paid.Deaton, however, sees five positives for Linqto customers in case the company files for bankruptcy. He wrote on X that the company has no debt, customers will get to vote on the outcome, private shares are accounted for, there are records of what every customer owns, and a bankruptcy will force regulators to not drag the case and comply with deadlines.
There is a good reason to believe Linqto customers are getting their money back, Deaton added.
However, not every Linqto customer is convinced.
Major investment firm offering Ripple, Circle shares at risk of bankruptcy first appeared on TheStreet on Jul 2, 2025
This story was originally reported by TheStreet on Jul 2, 2025, where it first appeared.
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