- The Linqto Inc. bankruptcy is being challenged as “fraudulent” in a new court filing by a major shareholde
- They allege management engaged in “improper forum shopping” by filing in Texas to avoid Delaware’s laws
- A key court hearing on Aug. 5 will decide if customer assets belong to the company’s estate
Chapter 11 bankruptcy filing of the private investment platform Linqto Inc. is now being challenged in court as “potentially fraudulent and strategically manipulative.”
Their major shareholder, Sapien Group, filed a motion to transfer the bankruptcy proceedings from Texas to Delaware. The Group asserts that the current venue is legally improper and was strategically manufactured by Linqto’s management to shield themselves from accountability.
The filing came just days after Ripple CEO Brad Garlinghouse publicly distanced his firm from Linqto, despite holding 4.7 million of pre-IPO Ripple shares.
Linqto Inc., a private investment platform known for offering pre-IPO shares, has landed in the middle of a high-stakes legal battle following its Chapter 11 bankruptcy filing in the Southern District of Texas earlier this month.
Related: Deaton Joins Linqto Creditors Panel to Maximize Retail Recovery Amid Fraud Case
The Accusation: A “Sham” Filing to Block a Shareholder Vote
According to the motion (Case No. 25-90186), Linqto’s management, under CEO F. Daniel Siciliano, created a Texas-based entity merely three months before filing, allegedly without informing or obtaining approval from shareholders.
Sapien’s founder and former Linqto board member, Victor Jiang, submitted a declaration accusing the current board of “numerous breaches of fiduciary duties, breaches of the duty of loyalty, and securities law violations.”
The motion suggests that the bankruptcy was preemptively filed to block an imminent shareholder vote aimed at replacing the allegedly illegitimate board.
Steven Nerayoff Speaks Out
Former Ethereum advisor and blockchain veteran Steven Nerayoff publicly condemned Linqto’s bankruptcy as a blatant injustice.
“Watching this injustice go unchallenged wasn’t an option,” Nerayoff wrote on X (formerly Twitter), claiming that the bankruptcy filing from Linqto is actually a way to seize customers’ assets.
Related: In a Sharp Statement, Ripple’s CEO Draws a Clear Line Between His Firm and Linqto
Although Nerayoff clarified he is neither a Linqto customer nor shareholder, he said he could not stand by while so many, especially those from the XRP community, are being “wronged.” His statement has amplified public scrutiny, especially among crypto investors and members of the XRPArmy.
Forum Shopping or Fraud?
The filing calls the Texas bankruptcy “a quintessential example of improper forum shopping,” designed to avoid accountability under Delaware law, where all substantive business operations were legally domiciled.
It also questions the legitimacy of CEO Siciliano’s appointment, noting the “unlawful switching” of board seats and bypassing shareholder consent, actions that Jiang says were designed to consolidate power and strip away governance safeguards.
Court Showdown Looms on August 5
A critical court date is set for August 5, 2025, where four motions are scheduled to be heard. One of them seeks a ruling that the securities’ proceeds belong to Linqto’s estate, not the customers.
If granted, this could have sweeping implications for over 15,000 customers across 130 countries, many of whom invested under the assumption that they held direct ownership in the underlying assets.
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