Ripple CEO Brad Garlinghouse has made it crystal clear - no business ties exist between Ripple and the embattled investment platform Linqto, as regulatory hawks circle above. This declaration comes amid swirling concerns that Linqto might have played a bit fast and loose with securities laws, resulting in inflated share prices and murky sales tactics.
Garlinghouse, distancing his company from the fray, clarified via the social platform X that Ripple’s entanglement with Linqto was limited to the secondary market. Linqto had sourced a significant stockpile of Ripple shares, precisely 4.7 million, from existing shareholders, rather than from Ripple itself. His statement serves as a firewall potentially safeguarding Ripple from the regulatory inferno now engulfing Linqto, which stands accused of dubious dealings like secretive markups and selling shares without proper disclosures, as highlighted by a report from Crypto Briefing.
Indeed, the saga unfolds like a Greek tragedy for Linqto. The company's ex-CEO William Sarris reportedly spearheaded a high-pressure tactic drive, affectionately termed “Spike Day,” to aggressively push Ripple shares at inflated rates - about 60% over their original purchase price. The operation was lucrative, netting a cool $2 million, but now the former profits might be overshadowed by penalties and legal fees as regulators from both the SEC and DOJ zero in.
The mess doesn't stop there. Allegations include marketing to non-accredited investors and even extending their tendrils into sanctioned jurisdictions like Iran and North Korea. If one were to make a checklist of 'what not to do' in financial regulation, Linqto seems to have ticked every box.
With Linqto's new management team now admitting to “serious securities law violations” and contemplating bankruptcy restructuring, it's a textbook case of a bad situation getting worse. What does this mean for Ripple? For now, they appear to be spectators from a safe distance, but the crypto and fintech ecosystems are tightly knit; repercussions could ripple out in unexpected ways, affecting trust and operations industry-wide, underlining the importance of systemic transparency and compliance.
As we watch this drama unfold, it becomes patently clear why entities like Ripple are proactively clarifying their positions and steering clear from the flames of controversy-because in the fintech world, reputation and regulatory compliance are just as valuable as any cryptocurrency or tech innovation.
