Linqto, a private investment platform granting access to shares of privately held companies, files for bankruptcy after investigations by the SEC and FINRA revealed serious deficiencies related to corporate structure and operational practices.
The big picture: CEO Dan Siciliano acknowledges “potentially insurmountable operating challenges” prompted by the discovery of flaws in Linqto’s business operations that cast doubt on the true ownership of customer assets.
- The case raises concerns about the risks individual investors encounter in the private markets, especially as the lure of investing in pre-IPO shares of companies like OpenAI and SpaceX creates interest despite the sector’s lack of robust regulation and transparency.
Go deeper: Linqto ceased operations in March upon realization of past non-compliance with securities laws, leading to the decision to seek Chapter 11 bankruptcy protection to maintain asset value and explore strategic options.
- The investment platform holds a portfolio of $500 million across 111 companies on behalf of its clients, with plans to utilize up to $60 million in debtor-in-possession financing from Sandton Capital Partners for ongoing operations during the bankruptcy process.
- Initiating proceedings in the U.S. Bankruptcy Court for the Southern District of Texas, Linqto aims to keep its operations running while undergoing restructuring, indicative of the complex challenges faced by companies entangled in legal and regulatory issues in the financial landscape.
