Ripple CEO Clarifies No Direct Involvement With Linqto Amid SEC Probe

Ripple CEO Brad Garlinghouse has taken steps to address investor concerns following increased scrutiny of Linqto, a private investment platform that facilitated access to Ripple equity through secondary markets. On July 2, Garlinghouse issued a statement clarifying that Ripple has no formal relationship with Linqto and that the platform was never authorized to sell Ripple shares directly. He confirmed that Linqto acquired 4.7 million Ripple shares by purchasing them from existing shareholders in secondary markets, not from Ripple itself. This clarification aims to reassure stakeholders who were worried that Ripple might have been involved in Linqto's questionable sales practices.

Ripple's leadership also revealed that the company ceased approving Linqto-related secondary transactions in late 2024 due to concerns about the platform's operations and compliance. This move underscores Ripple's efforts to distance itself from Linqto amid the ongoing controversy. Garlinghouse's statement on Twitter further emphasized that Linqto's 4.7 million shares were solely purchased on the secondary market, reiterating Ripple's lack of direct involvement in the sales.

Ripple CTO David Schwartz provided additional context, explaining that customers buying Ripple equity on Linqto did not receive direct ownership of Ripple shares. Instead, they acquired interests in special-purpose vehicles (SPVs) that held Ripple stock. Schwartz described this arrangement as common in private equity but acknowledged that it could be confusing for retail investors. He clarified that investors effectively own a fractional interest in an SPV that aggregates Ripple shares, stating, “you don’t own the shares directly, but you own a portion of a legal entity that owns.”

The controversy surrounding Linqto has intensified with investigations by the U.S. Securities and Exchange Commission (SEC) and the Department of Justice (DOJ). Former Linqto CEO William Sarris is under investigation for allegedly inflating the value of Ripple shares by more than 60% and selling them without proper authorization. Investigators are also focusing on Linqto’s sales to non-accredited investors, which could violate federal securities laws. Prominent crypto attorney John Deaton highlighted that roughly 11,500 Linqto users bought SPV units, believing they were acquiring actual Ripple shares. Deaton estimates that 5,000 of these investors are non-accredited, posing significant regulatory risks. He stated, “These are not Ripple shares as many believed, but units of SPVs holding Ripple stock. The involvement of thousands of non-accredited investors makes this a compliance nightmare.”

The situation has worsened with Linqto's internal shake-up. New management has acknowledged that client accounts were frozen in February 2025. The company is reportedly preparing a Chapter 11 bankruptcy filing, which could leave investors exposed as unsecured creditors. Legal experts warn that bankruptcy proceedings could lead to prolonged battles over asset distribution, particularly if regulatory agencies move to enforce penalties. While Ripple has taken steps to distance itself from Linqto's practices, thousands of investors remain in limbo amid investigations and potential bankruptcy proceedings. This episode highlights the risks inherent in secondary markets for private equity, especially in the crypto sector.