Linqto Bankruptcy Reveals 10,000-25,000 Investors May Lose Private Shares

Investors in Linqto are facing a dire situation as the platform's bankruptcy proceedings reveal significant structural failures in its investment model. According to distressed asset expert Thomas Braziel, the Chapter 11 filing by Linqto contains alarming details about how customer investments were handled, which could leave thousands of users with little recourse and at the back of the payout line.

Braziel highlighted the urgency of the situation, explaining that investors may not actually own any of the private shares they thought they were purchasing. Instead, they may now face an unpleasant reclassification as unsecured creditors, with no claim to actual shares, just a cash claim worth far less. Court documents indicate that Linqto never formalized its promised special-purpose vehicle (SPV) structure, failing to establish series LLCs or keep proper records. This means that rather than isolating shares by customer, the platform pooled assets with no legal segregation or individual title, grouping customers with general unsecured creditors (GUCs).

Despite listing over $500 million in private tech share assets and between 10,000 and 25,000 customers owed money, Braziel noted a key imbalance: only a few dozen other GUCs are on record. This imbalance suggests that customers need to organize quickly or risk being overwhelmed in the bankruptcy proceedings. While current management blames predecessors and seeks a regulatory-compliant restructure, the hiring of Jefferies, Portage Point, and Sullivan & Cromwell points to an impending courtroom struggle likely dominated by professionals.

In a related development, Ripple CEO Brad Garlinghouse clarified that Ripple has never had a business relationship with Linqto and never authorized it to sell Ripple shares. He confirmed that Linqto holds 4.7 million Ripple shares, acquired solely through secondary market transactions—not directly from Ripple. The company stopped further Linqto-related share transfers in late 2024 due to rising regulatory scrutiny and confusion over ownership structures. This development has amplified concerns among investors and intensified calls for structural reforms in how private equity is marketed and managed.