Ripple CEO Denies Business Ties With Linqto Amid SEC Probe

Ripple CEO Brad Garlinghouse has publicly denied any business relationship with Linqto, a private stock investment platform currently under investigation by the US Securities and Exchange Commission (SEC) and the Department of Justice (DOJ) for alleged securities fraud and deceptive sales practices.

Garlinghouse’s statement comes in response to reports indicating that Linqto, based in San Francisco, may have misled thousands of retail investors about the nature of their ownership and violated federal securities laws. Private shares, typically available only to accredited or institutional investors via secondary markets or private equity platforms, are subject to company approval and transfer restrictions.

According to reports, former Linqto CEO William Sarris orchestrated a high-pressure sales campaign internally dubbed “Spike Day” to offload Ripple shares to retail investors at prices allegedly 60% higher than what Linqto had paid, without disclosing the markup. The company reportedly earned $2 million from the campaign.

Ripple’s CEO clarified that Linqto did not directly purchase Ripple shares from Ripple, but went through secondary markets. “What we know from our records is Linqto owns 4.7M shares of Ripple, solely purchased on the secondary market from other Ripple shareholders (never directly from Ripple),” Garlinghouse wrote on X.

“Apart from Linqto being a shareholder, Ripple has never had a business relationship with Linqto, nor have they participated in our financing rounds,” he noted, adding that Ripple stopped approving further Linqto purchases on the secondary market in late 2024 due to growing skepticism about its practices.

Linqto is also alleged to have allowed non-accredited investors into restricted deals and marketed to users in sanctioned countries such as Iran and North Korea. These allegations have raised significant concerns about the platform's compliance with regulatory standards and its ethical practices.

The investigation into Linqto’s activities highlights the broader issues within the private stock investment sector, where regulatory oversight can be challenging due to the complexity and opacity of secondary markets. The SEC and DOJ’s probes into Linqto’s practices underscore the need for stricter enforcement and transparency in the sale of private shares to retail investors.

Garlinghouse’s denial of any business ties with Linqto is a strategic move to distance Ripple from the controversy and protect its reputation. By clarifying that Linqto’s shares were acquired through secondary markets and not directly from Ripple, the CEO aims to reassure investors and stakeholders about the company’s integrity and compliance with regulatory standards.

The ongoing investigation into Linqto’s activities serves as a cautionary tale for other fintech companies and investment platforms, emphasizing the importance of adhering to legal and ethical standards in their operations. As the regulatory landscape continues to evolve, companies must prioritize transparency and compliance to avoid similar scrutiny and potential legal repercussions.