Ripple CTO’s Shocking Pre-IPO Share Revelations Amid Linqto’s Implosion

Ripple's Chief Technology Officer just dropped a grenade in the private markets—while Linqto's platform crumbles under regulatory scrutiny. Here's what it means for your portfolio.

Pre-IPO Chaos Unleashed

The CTO's comments sent shockwaves through secondary markets, exposing cracks in the 'democratized' private investing narrative. Turns out, even blockchain execs can't escape Wall Street's favorite game: musical chairs with unregistered securities.

Linqto's House of Cards

As the pre-IPO platform struggles, investors are left holding the bag—proving once again that 'disruption' often means 'your money disappears faster.' The irony? This mess makes XRP's regulatory battles look almost quaint.

Bottom line: When the suits start talking, lock up your wallets. The only thing getting 'liquid' here is your net worth.

“You Never Owned Ripple Shares”— CTO

Ripple’s chief technology officer David Schwartz—better known online as “JoelKatz”—added fuel to the blaze by reminding holders that they never owned Ripple equity outright. “You don’t own the shares directly,” Schwartz wrote, “but you own a portion of a legal entity that owns the shares.” He elaborated, saying: “So if you ‘bought’ Z shares, you own X fraction of a legal entity with Y shares where X×Y=100. This generally lets you buy ‘shares’ more easily and in smaller quantities, but the equivalent per-share price is usually higher.”

This clarification dismantled a key misconception among many Linqto clients who believed they were holding Ripple stock directly. The implications are now being examined not only by the SEC but also by customers who fear their indirect ownership could be rendered illiquid or encumbered in bankruptcy court.

When pressed about whether those SPVs could be affected by Linqto’s financial collapse, Schwartz responded: “The legal entity that owns the shares that you own part of should not have exposure to Linqto going bankrupt. So a direct encumbrance on the shares to cover Linqto’s debts shouldn’t happen. But the entity may face operational challenges depending on exactly how it’s structured.”

That operational risk is precisely what has many investors on edge. If trustees, custodians, or record-keepers tied to those SPVs are forced to restructure, change providers, or liquidate assets, investors may find themselves in prolonged legal limbo with no access to their holdings—even if the shares remain technically intact on the cap table.

The Alleged George Soros Link

Complicating perceptions further, Schwartz addressed a separate thread linking billionaire George Soros to Ripple. He clarified that Soros Fund Management backed PolySign—another private company in which many Linqto users invested—during its 2022 acquisition of fund administrator MG Stover, but said he was “not aware of any Soros connection to Ripple.”

Initially, Schwartz wrote: “It wouldn’t surprise me very much since his funds own bits of almost everything (Salesforce, Amazon, Google, JP Morgan, Goldman, Uber, FedEx, and many more), but I couldn’t find any actual connection.”

However, after further reflection, he corrected himself: “Oh, wait, I remember now. Yes, Soros’ fund did invest in PolySign to help finance the acquisition of MG Stover! No connection to Ripple AFAICT though.”

The deeper regulatory concern is structural. Linqto created more than 500 SPVs, each designed to pool hundreds of retail investors while keeping the underlying issuer’s shareholder count below the 2,000-owner threshold that triggers public-reporting obligations. Internal emails obtained by investigators show former executives exhorting staff to “take no prisoners” in sales campaigns—at times buying back Ripple shares from customers at $55 each, only to flip them to Ripple for $61, banking an $8 million spread. If those shares never made it into the SPVs—as suggested in confidential memos cited by investigators—questions of beneficial ownership, tax liability and voting rights could embroil Ripple itself in discovery.

What happens next will hinge on three converging clocks: Linqto’s restructuring timetable, the SEC’s enforcement calendar and the pace at which SPV trustees can—or cannot—demonstrate clean title to almost half a billion dollars’ worth of private-company shares. Until then, thousands of would-be Ripple shareholders remain locked out of their accounts, watching from the sidelines as a legal and regulatory cyclone decides whether their “pre-IPO dream” survives or is wiped out in a courtroom ledger.

At press time, XRP traded at $2.20.