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Ripple Clarifies Linqto Relationship Amid Regulatory Investigation
In a recent statement, Brad Garlinghouse, CEO of Ripple, has clarified the company’s relationship with Linqto amidst growing regulatory scrutiny. The clarification comes as the Securities and Exchange Commission (SEC) and the US Department of Justice (DOJ) investigate Linqto for potential securities law violations.
According to Ripple, they have never had a formal relationship with Linqto and did not authorize any direct equity sales to the platform. Instead, it is stated that Linqto owns 4.7 million shares of Ripple solely purchased on the secondary market from other Ripple shareholders.
Furthermore, Ripple has halted approving Linqto-related transactions in late 2024 due to growing concerns about the company’s practices. This move corroborates an earlier statement made by David Schwartz, Ripple’s CTO, who explained that Linqto customers did not hold Ripple shares directly. Rather, they owned a fraction of a legal entity, known as a special-purpose vehicle (SPV), that held Ripple equity.
The clarification comes amidst scrutiny surrounding Linqto’s practices and potential securities law violations. The investigation focuses on allegations of inflated Ripple share prices by former CEO William Sarris and the sale of shares to non-accredited investors. Notably, a prominent pro-crypto attorney has warned that this could pose significant regulatory challenges for Linqto.
As the investigation unfolds, it remains to be seen how these developments will impact the cryptocurrency market. However, it is clear that Ripple is seeking to distance itself from any controversy surrounding Linqto’s practices and potential securities law violations.
Source: cryptoslate.com
