Investors need investors to be “very concerned” as Linqto’s bankruptcy exposes the collapsed legal structure, pooled customer assets, and the looming reclassification as an unsecured creditor.
The collapse of linqto is a “brutal wake-up call.” Why should customers be very worried
The cascade of structural obstacles in Linqto’s investment model threatens to almost rely on thousands of users as bankruptcy proceedings are unfolding and placed behind the payment line. Thoughtful assets expert Thomas Braziel shared on social media platform X on July 12 that Linqto’s Chapter 11 filing includes incredible details about how customer investments were handled. Braziel emphasized the urgency of the situation, explaining “Why should customers be very concerned?”
He explained that he may not own the individual stocks that investors thought were actually buying. Instead, they could now face an unpleasant reclassification.
Customers who purchase private stocks via Linqto can take part in a brutal wake-up call. You could be dollarized – meaning you would be treated as an unsecured creditor, no actual claims for stocks, and only a much less cash claim.
Court documents show that Linqto did not formalize the promised special purpose vehicle (SPV) structure, and do not establish a Series LLC or maintain appropriate records. The legal flow chart for the initial filing shows that the platform pooled assets without legal separation or individual titles, rather than separating stocks by customers. Despite over $500 million in private tech share assets and 10,000-25,000 customers paying, Braziel noted an important imbalance.
While current management is blaming its predecessors and calling for regulatory restructuring, Braziel noted that the employment of Jeffreys, Portage Point, Sullivan & Cromwell points to an imminent legal battle that could be dominated by experts.
In a related clarification, Ripple CEO Brad Garlinghouse said earlier this month that Ripple had never established a business relationship with Linqto and never allowed him to sell Ripple shares. He confirmed that Linqto holds 4.7 million Ripple shares. This was acquired only through secondary market transactions, not directly from Ripple. The company further halted Linqto-related stock transfers in late 2024 due to increased regulatory scrutiny and confusion over ownership structure. The development has augmented concerns among investors and strengthened the demand for structural reforms on how private equity is sold and managed.
