SEC Probe and FTX Comparisons
Linqto filed for bankruptcy July 7 amid an SEC investigation and internal concerns that customers were misled about the true nature of their holdings. The company’s collapse immediately drew parallels to the cryptocurrency giant FTX.
But Stark made clear this case must not follow FTX’s drawn-out, resource-draining path. Unlike FTX, which offset its expenses with soaring crypto valuations, Linqto lacks that luxury. “We want to avoid that gamble,” Stark said.
Both sides plan to bring in an asset manager to oversee accounts until distributions are complete. Non-account creditors will depend on litigation proceeds and sales of Linqto’s remaining assets, including a $16 million reserve fund.
Asset Sales and Court Approval
On Tuesday, Judge Perez also approved a process to sell Linqto’s securities, with the committee and U.S. Trustee’s Office guaranteed five days’ notice before any transaction. The motion faced pushback from shareholder Sapien Group, which argued ownership evidence was lacking.
Judge Perez acknowledged the gaps but framed the order as merely “the first step.” Stark assured the court a “full vetting” of proposed sales would follow.
