Michaela
Summary: Why does the Linqto bankruptcy raise concerns about tokenized assets in Web3?
The Linqto bankruptcy emphasizes the risks involved when platforms sell tokenized or fractional shares without clear legal ownership or regulatory oversight. Many investors may have believed they owned actual shares, but the company’s structure raised doubts about the legitimacy of those claims. This case serves as a warning for the Web3 space to ensure transparency and true ownership in decentralized investment models.
Fintech platform Linqto, Inc. has filed for Chapter 11 bankruptcy, triggering concerns about the legitimacy of its investment offerings. The company, which pitched itself as a gateway for retail investors to buy shares in high-profile private firms, is now facing allegations that investors may never have actually owned the shares they believed they were purchasing.
Linqto filed for Chapter 11 bankruptcy in the U.S. Bankruptcy Court for the Southern District of Texas on July 7, disclosing estimated assets and liabilities each ranging between $500 million and $1 billion. The fintech firm also revealed that the proceedings could impact more than 10,000 creditors.
Allegations of long-standing mismanagement have raised questions about the company’s financial stability, with Chief Restructuring Officer Jeffrey Stein stating that former executives “knowingly failed to cure extensive and serious securities law violations that began as early as 2020.”
Linqto’s most sought-after investment products included secondary market shares of U.S.-based fintech firm Ripple Labs Inc. The company claimed to hold approximately 4.7 million Ripple shares through its affiliated investment vehicle, Linqto Liquidshares, a stake that could be valued at around $450 million based on current secondary market pricing.
However, concerns over the legitimacy of Linqto’s ownership claims have surfaced following its Chapter 11 filing. The documents revealed that the company structured its investment offerings through series of limited liability companies, but failed to obtain the required transfer approvals from issuers such as Ripple, raising doubts about whether investors ever held legal title to the shares.
Additionally, last week, Ripple CEO Brad Garlinghouse publicly addressed the company’s relationship with Linqto in a post 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,” Garlinghouse wrote. “We stopped approving more Linqto purchases on secondary markets in late 2024 amid growing skepticism,” he added.
According to Bloomberg, the U.S. Securities and Exchange Commission has launched an investigation into Linqto to determine whether the firm permitted ineligible investors to buy securities and whether its former executives misrepresented the nature of those investments. Regulators are reportedly examining whether customers were led to believe they held actual shares, when in reality they may have only owned indirect “representative units” with uncertain legal status.
Linqto Bankruptcy: Wake-Up Call for Web3 Ownership and Trust
The Linqto bankruptcy sends a clear signal across the crypto space—and the Shiba Inu ecosystem is listening. The fallout from selling “representative” shares without regulatory clarity is a reminder of why trustless, transparent systems matter.
As Shibarium continues to scale and explore the future of tokenized real-world assets and decentralized private investments, this moment stands as a cautionary tale. Shib isn’t here to mimic the old system, but to build something better. In the Shiba Inu ecosystem, ownership should mean true ownership, and access should be earned through community, not confusion.
This isn’t just about what went wrong—it’s about making sure Shib, as a decentralized collective, keeps building the right way.
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Michaela has no crypto positions and does not hold any crypto assets. This article is provided for informational purposes only and should not be construed as financial advice. The Shib Magazine and The Shib Daily are the official media and publications of the Shiba Inu cryptocurrency project. Readers are encouraged to conduct their own research and consult with a qualified financial adviser before making any investment decisions.
