Ripple Denies Formal Ties to Linqto as SEC and DOJ Probe Alleged Share Price Manipulation

Ripple's latest regulatory headache just got twistier. The blockchain giant is scrambling to distance itself from Linqto—a private investment platform—as federal investigators circle.

SEC and DOJ turn up the heat

Multiple sources confirm both agencies are examining potential market manipulation around Linqto's Ripple-related share offerings. No formal charges filed yet, but subpoenas are reportedly flying.

The timing couldn't be worse for Ripple, which recently settled its marathon SEC lawsuit only to face fresh scrutiny. Company spokespeople insist any Linqto connections are purely arms-length—about as convincing as a crypto exchange's 'proof of reserves.'

Wall Street's watching this one closely. Another black eye for crypto? Or just regulators flexing their post-FTX muscles? Either way, XRP holders aren't getting much sleep tonight.

Linqto’s investigations

The controversy surrounding Linqto comes as the Securities and Exchange Commission (SEC) and the US Department of Justice (DOJ) investigate Linqto for potential securities law violations.

According to reports, former Linqto CEO William Sarris is under scrutiny for allegedly inflating Ripple share prices by over 60% and selling them without proper authorization.

The investigation also focuses on the company’s sale of shares to non-accredited investors, with pro-crypto attorney John Deaton warning that this could pose a significant regulatory challenge for Linqto.

Deaton claimed that approximately 11,500 Linqto users had bought SPV units, assuming they were purchasing actual Ripple shares. Of those, about 5,000 are non-accredited investors, heightening concerns about compliance with SEC regulations.

He wrote:

“These are not Ripple shares per se (like many people believed, assumed, or allegedly, were led to believe) but shares/units of a SPV(s) that owned the Ripple shares. I’ve been told 4-5,000 of those SPV Ripple investors are non-accredited, which makes this a regulatory compliance nightmare.”

Meanwhile, the company’s new management, which took over after a series of missteps, has acknowledged the severity of the situation. They confirmed that client accounts were frozen in February and indicated that a Chapter 11 bankruptcy filing could leave investors in a vulnerable position, as unsecured creditors.