XRP: Ripple CEO Refutes Claims of Direct Share Sales to Linqto

XRP has once again become the center of attention in the crypto world after Ripple CEO Brad Garlinghouse clarified concerns about the embattled investment firm Linqto and its association with Ripple. Rumors had been circulating that Linqto directly purchased shares in Ripple, prompting the executive to set the record straight.

Amid widespread confusion and investor concern, Garlinghouse publicly addressed the matter, emphasizing that Ripple has not sold any of its shares directly to Linqto. According to him, Linqto owns approximately 4.7 million Ripple shares, but these were acquired through secondary market transactions — not from Ripple itself. His statement underscores that the company did not participate in any direct financing rounds involving Linqto.

“Our records confirm that Linqto acquired all 4.7 million Ripple shares on the secondary market from existing shareholders,” said Garlinghouse. He noted that inquiries have surged from individuals who believed they were purchasing shares directly from Ripple via Linqto, especially now that Linqto is reportedly facing bankruptcy proceedings following regulatory scrutiny.

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The misperception surrounding Linqto’s role in distributing Ripple equity has created confusion, particularly among retail investors. Ripple CTO David Schwartz and well-known XRP advocate John Deaton also chimed in with their perspectives, further clarifying the situation.

Garlinghouse made it crystal clear: “Ripple has never had a business relationship with Linqto.” He went on to disclose that Ripple had proactively stopped accepting secondary market sales to Linqto late last year due to increasing skepticism over the firm’s operations.

The growing spotlight on Linqto comes after a Wall Street Journal report highlighted that the firm could be subject to federal investigations and possibly bankruptcy. Founded in 2017, Linqto allowed retail investors to invest in pre-IPO companies but has become a lightning rod for regulatory attention. It attracted more than $500 million in investments, but its marketing tactics and alleged sale of unregistered securities to unqualified investors have drawn serious criticism.

XRP community figure Deaton elaborated on the matter by stating Linqto did not sell actual Ripple shares. Instead, Linqto offered stakes in a Special Purpose Vehicle (SPV) linked to Ripple’s shares. Of the 13,000 clients who transacted through Linqto, nearly 11,500 purchased units of the SPV, mistakenly believing they had directly acquired Ripple stock. Notably, between 4,000 to 5,000 of these purchasers were non-accredited investors — a detail that poses a significant legal challenge.

https://x.com/JohnEDeaton1/status/1939711934846116281

This revelation magnifies the compliance risks for Linqto, especially as the SEC’s Enforcement Division intensifies its involvement. Deaton’s analysis pointed out the intricacies within SPVs and the regulatory pitfalls of selling to unaccredited investors. This is expected to influence how such investment platforms operate moving forward.

Ripple’s firm stance on the matter further solidifies its commitment to transparency. By taking this proactive communication route, the company aims to protect its brand integrity and distance itself from firms under regulatory heat. For XRP holders and Ripple backers, the situation also serves as a broader reminder to engage in proper due diligence when entering the pre-IPO investment space.

Related: Expert Advice: Sell XRP If You’re Confused

The XRP ecosystem, already subject to intense scrutiny due to its longstanding regulatory battles, continues to evolve within a landscape affected by legal and financial minefields. By addressing the Linqto controversy head-on, Ripple reassures its global investor base that it remains focused on compliant and credible funding strategies, distancing itself from questionable secondary market practices.