Former Linqto Chief Revenue Officer Gene Zawroty has taken legal action against the Delaware investment company, along with two of its executives, citing a range of allegations including fraud and market manipulation.
Zawroty filed the lawsuit in California’s Santa Clara County on October 7, 2024, although news of the lawsuit only recently became public knowledge. The case was brought to light by prominent XRP community figure Eri in a recent post.
The lawsuit was initiated by Zawroty, a former executive at Linqto, who claims that he was wrongfully terminated by the company after raising concerns about its lack of compliance with regulations. Among his allegations, Zawroty asserts that Linqto engaged in insider trading, prioritizing its own profits over the needs of its customers. He also claims that the company used unlicensed brokers and made misleading claims about its user base.
According to the complaint, Linqto falsely stated that it had over 750,000 users when in reality it only had around 10,000 users, with a mere 30% being accredited. Additionally, the complaint alleges that Linqto inflated share prices beyond the recommended limit set by FINRA, using a unique algorithm to artificially boost prices with each sale.
This manipulation, as per the complaint, created a false sense of scarcity among investors, driving up demand. Other allegations against Linqto include bypassing SEC rules, deceptive marketing practices, and failure to comply with FINRA standards.
Zawroty claims that both Linqto and its executives were aware of these issues but chose to ignore them. He also accuses the company of making false promises to him regarding compensation and stock options before terminating his employment 107 days after being hired to prevent his stock from vesting and avoid addressing compliance concerns.
Seeking injunctive relief, attorney’s fees, and various damages, Zawroty describes his termination as unjust and damaging to his career and financial stability. Established in 2018, Linqto enables investments in private markets with a minimum investment threshold of $2,500. The platform allows investors to purchase stocks of various companies, including Ripple’s pre-IPO stock.
In a recent development, Linqto announced plans to incorporate XRP as a payment method for its tokenized private equity proof-of-concept shortly after a U.S. Federal Judge declared that XRP is not a security. Ripple CTO David Schwartz has endorsed Linqto as a legitimate investment platform, emphasizing its role in facilitating investments in companies like PolySign, where Schwartz serves on the board.
Disclaimer: This article is for informational purposes only and should not be construed as financial advice. The opinions expressed are those of the author and do not necessarily reflect those of The Crypto Basic. Readers are encouraged to conduct thorough research before making any investment decisions, as The Crypto Basic is not liable for any financial losses.