Linqto, a buzzy fintech that promised Main Street investors early access to Silicon Valley's hottest private companies, has crashed.
The company has filed for Chapter 11 bankruptcy in Texas and is now trying to offload more than $500 million in assets, including a massive stake in Ripple, amid mounting legal and regulatory pressure.
SEC and FINRA step in
According to court filings and reporting by Reuters , the SEC and FINRA are investigating whether Linqto illegally sold unregistered securities to unqualified investors and tacked on excessive markups — reportedly over 60% for Ripple shares in some cases .
The Wall Street Journal adds that FINRA referred Linqto Capital, the firm's broker-dealer affiliate, for enforcement late last year, and the company ceased operations in March 2025 amid mounting scrutiny .
Linqto's portfolio is staggering. Over $399 million in Ripple, $100 million+ in Circle, and around $35 million in SpaceX, according to filings reviewed by Debtwire and ION Analytics. In total, the portfolio spans 111 private companies with $500 million in assets, as per Bloomberg .
A bankruptcy judge had earlier authorized Linqto to start selling these holdings to fund the case and pay off creditors .
DIP loan controversy
The mess got messier when Linqto executives tried to use customer-linked shares as collateral for a $60 million debtor-in-possession (DIP) loan, a move that drew instant backlash.
Ripple attorney John E. Deaton intervened. On August 19, he stated:
"My motion objecting to the DIP loan and asking the Judge to impose a Constructive Trust ruling in effect [that] Linqto does not own the shares and therefore cannot collateralize those shares will NOT be litigated."
Had the plan gone forward, many customers could have seen their assets liquidated just to cover Linqto's legal fees — raising comparisons to FTX's bankruptcy chaos .
Ripple tries to stay out of it
Ripple, for its part, is keeping its distance. CEO Brad Garlinghouse explained in July:
"Apart from Linqto being a shareholder, Ripple has never had a business relationship with Linqto, nor have they participated in our financing rounds."
He also said Ripple stopped authorizing secondary share sales via Linqto in late 2024, around the time FINRA launched its probe.
For Linqto's 13,600 customers, the situation is uncertain. Many are concerned with potentially being treated as unsecured creditors since their assets are legally part of the bankruptcy estate. This means that customers' shares may be sold, and cash distributed to all creditors.
All of this will depend on a Liquidating Trust, explained Deaton.
This story was originally reported by TheStreet on Aug 20, 2025, where it first appeared in the MARKETS section. Add TheStreet as a Preferred Source by clicking here.
