A cascade of structural failures in Linqto’s investment model now threatens to leave thousands of users with little recourse as bankruptcy proceedings unfold, putting them at the back of the payout line. Distressed asset expert Thomas Braziel shared on social media platform X on July 12 that Linqto’s Chapter 11 filing contains alarming details about how customer investments were handled. Braziel underscored the urgency of the situation, explaining “why customers should be VERY concerned.”

He explained that investors may not actually own any of the private shares they thought they were purchasing. Instead, they may now face an unpleasant reclassification:

Customers who bought private shares via Linqto may be in for a brutal wake-up call. You are likely to be dollarized — i.e., treated as an unsecured creditor, with no claim to actual shares, just a cash claim worth far less.

Court documents indicate that Linqto never formalized its promised special-purpose vehicle (SPV) structure, failing to establish series LLCs or keep proper records. The legal flow chart in the initial filing shows that, rather than isolating shares by customer, the platform pooled assets with no legal segregation or individual title—meaning customers are now grouped with general unsecured creditors (GUCs). Despite listing over $500 million in private tech share assets and between 10,000 and 25,000 customers owed money, Braziel noted a key imbalance: “The bankruptcy filing lists $500M+ in assets (private tech shares) and 10,000–25,000 customers owed money. But only a few dozen other GUCs on record. Customers need to organize fast or get steamrolled.”

While current management blames predecessors and seeks a regulatory-compliant restructure, the hiring of Jefferies, Portage Point, and Sullivan & Cromwell points to an impending courtroom struggle likely dominated by professionals, Braziel noted.

In a related clarification, Ripple CEO Brad Garlinghouse stated earlier this month that Ripple has never had a business relationship with Linqto and never authorized it to sell Ripple shares. He confirmed Linqto holds 4.7 million Ripple shares, acquired solely through secondary market transactions—not directly from Ripple. The company stopped further Linqto-related share transfers in late 2024 due to rising regulatory scrutiny and confusion over ownership structures. This development has amplified concerns among investors and intensified calls for structural reforms in how private equity is marketed and managed.

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