{"id":34642,"date":"2025-07-01T17:31:31","date_gmt":"2025-07-01T17:31:31","guid":{"rendered":"https:\/\/dogewisperer.com\/?p=34642"},"modified":"2025-07-01T17:31:31","modified_gmt":"2025-07-01T17:31:31","slug":"ripple-cto-drops-bombshell-on-pre-ipo-shares-as-linqto-meltdown-explodes","status":"publish","type":"post","link":"https:\/\/dogewisperer.com\/?p=34642","title":{"rendered":"Ripple CTO Drops Bombshell On Pre-IPO Shares As Linqto Meltdown Explodes"},"content":{"rendered":"
\n

Linqto\u2019s once-celebrated promise to \u201cdemocratize\u201d (Ripple) pre-IPO investing is collapsing under the weight of federal probes, a looming bankruptcy filing and a furious customer base that now numbers roughly 13,000.<\/p>\n

According to an internal review first detailed by The Wall Street Journal, investigators for the Securities and Exchange Commission and the US Department of Justice are examining allegations that former chief executive William Sarris secretly marked up Ripple shares by more than 60 percent, sold customer stock without permission and promoted deals to thousands of investors who failed to meet accredited-investor standards. New management concedes that client accounts have been frozen since February and warns that a Chapter 11 filing could leave many investors as unsecured creditors.<\/p>\n

A March 14 press release from the company\u2019s new leadership confirmed \u201cpervasive securities-law violations,\u201d the pausing of all trading and the dismissal of nearly half the staff while Linqto \u201cexplores all options to preserve value,\u201d including court-supervised restructuring. The same statement insists that the special-purpose vehicles (SPVs) holding customers\u2019 assets remain on issuer cap tables, but concedes that an independent forensic review is under way to verify that claim.<\/p>\n

Into that vacuum stepped<\/a> attorney John E. Deaton<\/a>, who told his X followers that the situation is a \u201ctotal clusterfuck\u201d and that roughly 11,500 Linqto users bought units in SPVs that, in turn, were supposed to own Ripple shares. Deaton says as many as 5,000 of those investors are non-accredited, creating \u201ca regulatory compliance nightmare\u201d now squarely on the SEC\u2019s radar. He plans to host a live session at 3 p.m. EST today to detail what he calls a \u201cheavily involved\u201d enforcement action and to explain why simply refunding principal would strip investors of six- and seven-figure gains booked on private-share price appreciation.<\/p>\n

\u201cYou Never Owned Ripple Shares\u201d\u2014 CTO<\/h2>\n

Ripple\u2019s chief technology officer David Schwartz\u2014better known online as \u201cJoelKatz\u201d\u2014added<\/a> fuel to the blaze by reminding holders that they never owned Ripple equity outright. \u201cYou don\u2019t own the shares directly,\u201d Schwartz wrote, \u201cbut you own a portion of a legal entity that owns the shares.\u201d He elaborated, saying: \u201cSo if you \u2018bought\u2019 Z shares, you own X fraction of a legal entity with Y shares where X\u00d7Y=100. This generally lets you buy \u2018shares\u2019 more easily and in smaller quantities, but the equivalent per-share price is usually higher.\u201d<\/p>\n

This clarification dismantled a key misconception among many Linqto clients<\/a> who believed they were holding Ripple stock directly. The implications are now being examined not only by the SEC but also by customers who fear their indirect ownership could be rendered illiquid or encumbered in bankruptcy court.<\/p>\n

When pressed about whether those SPVs could be affected by Linqto\u2019s financial collapse, Schwartz responded: \u201cThe legal entity that owns the shares that you own part of should not have exposure to Linqto going bankrupt. So a direct encumbrance on the shares to cover Linqto\u2019s debts shouldn\u2019t happen. But the entity may face operational challenges depending on exactly how it\u2019s structured.\u201d<\/p>\n

That operational risk is precisely what has many investors on edge. If trustees, custodians, or record-keepers tied to those SPVs are forced to restructure, change providers, or liquidate assets, investors may find themselves in prolonged legal limbo with no access to their holdings\u2014even if the shares remain technically intact on the cap table.<\/p>\n

The Alleged George Soros Link<\/h2>\n

Complicating perceptions further, Schwartz addressed a separate thread linking billionaire George Soros to Ripple. He clarified that Soros Fund Management backed PolySign\u2014another private company in which many Linqto users invested\u2014during its 2022 acquisition of fund administrator MG Stover, but said he was \u201cnot aware of any Soros connection to Ripple.\u201d<\/p>\n

Initially, Schwartz wrote: \u201cIt wouldn\u2019t surprise me very much since his funds own bits of almost everything (Salesforce, Amazon, Google, JP Morgan, Goldman, Uber, FedEx, and many more), but I couldn\u2019t find any actual connection.\u201d<\/p>\n

However, after further reflection, he corrected himself: \u201cOh, wait, I remember now. Yes, Soros\u2019 fund<\/a> did invest in PolySign to help finance the acquisition of MG Stover! No connection to Ripple AFAICT though.\u201d<\/p>\n

The deeper regulatory concern is structural. Linqto created more than 500 SPVs, each designed to pool hundreds of retail investors while keeping the underlying issuer\u2019s shareholder count below the 2,000-owner threshold that triggers public-reporting obligations. Internal emails obtained by investigators show former executives exhorting staff to \u201ctake no prisoners\u201d in sales campaigns\u2014at times buying back Ripple shares from customers at $55 each, only to flip them to Ripple for $61, banking an $8 million spread. If those shares never made it into the SPVs\u2014as suggested in confidential memos cited by investigators\u2014questions of beneficial ownership, tax liability and voting rights could embroil Ripple itself in discovery.<\/p>\n

What happens next will hinge on three converging clocks: Linqto\u2019s restructuring timetable, the SEC\u2019s enforcement calendar and the pace at which SPV trustees can\u2014or cannot\u2014demonstrate clean title to almost half a billion dollars\u2019 worth of private-company shares. Until then, thousands of would-be Ripple shareholders remain locked out of their accounts, watching from the sidelines as a legal and regulatory cyclone decides whether their \u201cpre-IPO dream\u201d survives or is wiped out in a courtroom ledger.<\/p>\n

At press time, XRP traded at $2.20.<\/p>\n

\"XRP<\/div>\n","protected":false},"excerpt":{"rendered":"

Linqto\u2019s once-celebrated promise to \u201cdemocratize\u201d (Ripple) pre-IPO investing is collapsing under the weight of federal probes, a looming bankruptcy filing and a furious customer base that now numbers roughly 13,000. According to an internal review first detailed by The Wall Street Journal, investigators for the Securities and Exchange Commission and the US Department of Justice […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"iawp_total_views":0,"footnotes":""},"categories":[2],"tags":[3,4,5],"class_list":["post-34642","post","type-post","status-publish","format-standard","hentry","category-news","tag-crypto","tag-doge","tag-news"],"_links":{"self":[{"href":"https:\/\/dogewisperer.com\/index.php?rest_route=\/wp\/v2\/posts\/34642","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/dogewisperer.com\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/dogewisperer.com\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/dogewisperer.com\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/dogewisperer.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=34642"}],"version-history":[{"count":0,"href":"https:\/\/dogewisperer.com\/index.php?rest_route=\/wp\/v2\/posts\/34642\/revisions"}],"wp:attachment":[{"href":"https:\/\/dogewisperer.com\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=34642"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/dogewisperer.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=34642"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/dogewisperer.com\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=34642"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}