Bankrupt fintech cutting agreements on shares that are difficult to get

(Bloomberg) -The collapse of the Fintech Start Linqto Inc. agreed to pay an agreement to repay customers who were promised that they could have private businesses difficult. Linqto, who started offering private investments in 2020, was part of a wave of financial businesses claiming that the private markets are more accessible with interest in some of the hottest technology firms. Instead, it misled clients about what it really owned before he went bankrupt this summer. Under the proposal, announced during a court trial on Tuesday, the company will offer clients one of the two options to be repaid. Customers can choose to accept shares in a closed fund that can be sold like any other public share, or to get interests in a trust that they could only pay at certain times, said bankruptcy lawyer A. Schwartz, bankruptcy lawyer. The fund and the trust will both be part of Linqto’s portfolio of interests in private firms – including those such as Crypto Startup Ripple and Elon Musk’s SpaceX – worth more than $ 500 million, according to court documents. The firm in San Jose bought the game for himself and clients before he closed and submitted for bankruptcy in July, while being investigated by federal regulators. The downfall of the online investment platform highlights the dangers to retail investors from buying interests in illiquid and difficult-to-value-private assets. Attorneys for the business and clients say that former Linqto managers promised incorrectly that they could buy interests in private firms before these businesses became public. In fact, the interests purchased by Linqto were held by vehicles that the company set up, according to court documents. Since the action of the company has violated security laws, these interests cannot be transferred to the clients who put money on Linqto’s platform, the creditor Kenneth Aulet said in court. For example, about 8,000 clients thought they had bought an interest in Ripple, Aulet said. But if Linqto tries to distribute shares to everyone, Ripple would immediately become a bursary traded company under US security laws, he said. Ripple would oppose the move, he said. “It’s a fraud case,” Aulet said. “What Linqto promised and what it delivered is very different.” The fraud was investigated by new managers, who worked with customer and creditor attorneys on the new plan. The agreement will enable Linqto to avoid an expensive court fight over who has the securities, which is a complicated demand linked to federal rules for accredited investors, advocates said. The array between Linqto and two groups representing clients must be approved by a judge and then included in a bankruptcy plan. The case is Linqto Texas, LLC, 25-90186, US Bankruptcy Court, the Southern District of Texas. More stories like these are available on Bloomberg.com © 2025 Bloomberg LP