When Linqto filed for bankruptcy in July 2025, it wasn’t just the end of another Silicon Valley startup story.
It was a loud, painful warning to anyone working in highly regulated industries: some corners just can’t be cut. Especially when those corners involve investor funds, legal structures, and the accounting records.
In this newsletter, I’ll walk you through Linqto’s journey—what they did right, where they failed, and why their story carries urgent lessons for managers across departments.
A Promising Business Model
Linqto was founded in 2010 by a husband and wife team—Bill and Vicki Sarris. He was a financial services architect at Intuit (a business software company), and she was a biologist. It’s easy to see how Bill’s background in product development might have seemed relevant. But investment accounting, especially when you’re handling stocks, presents a unique set of challenges.
Regardless, Linqto found some success in the mid-2010s, particularly after gaining access to high-profile names like SpaceX and later Ripple. Venture capitalists backed them with around US$3 million, and the platform kept growing.
Linqto offered a compelling promise: easier access to pre-IPO companies. Most of us can only invest in unicorns (startups valued at $1 billion or more) once they go public, as access to pre-IPO shares is restricted to exclusive channels, such as friends and family rounds, inside connections with venture capitalists, or early employee stock options.
But if you had cash, Linqto had a way to give you a piece of promising companies such as Calm, Cohere, and the already mentioned SpaceX and Ripple.
To pull that off, Linqto needed five things:
· Access to the right companies and their shares.
· A network of investors ready to buy.
· A platform to facilitate transactions.
· Legal frameworks to move stocks.
· Solid accounting systems to track ownership.
They excelled in the first three. They had contacts, buyers, and tech to make transactions happen and run smoothly. They knew how to create, seed, and manage the business environment. But instead of following the expected procedures, they decided to bend legal and accounting rules.
Compliance Failures and Legal Violations
The unraveling began with a series of deeply problematic decisions—decisions that weren’t operational missteps, but potential violations of U.S. securities law.
The SEC (Securities and Exchange Commission) began investigating Linqto around 2023/24, and from what I’ve seen, they had every reason to do it.
First, Linqto was selling stock at prices 50–60% above the company’s valuation—well beyond the 10% premium legally allowed.
Second, they were allegedly selling to unaccredited investors. That’s a major violation.
To be allowed to buy into investments that aren’t tightly regulated by the SEC—such as pre-IPO startups, private equity, or private debt—you must meet around 15 criteria (often related to assets, income, or net worth thresholds) and become an accredited investor.
Third, and even more serious, they reportedly sold shares to individuals in sanctioned countries, such as Iran and North Korea.
Fourth, according to their operating agreement, when you bought, let’s say, Ripple shares through Linqto, you were supposed to be buying into a separate entity—one that held only Ripple. Everything was supposed to be clean, separate, and traceable.
But Linqto apparently didn’t do that. Instead, they left the stocks in a shared holding company called Linqto Liquidshares LLC and told investors they had an “economic interest.” Those words don’t appear in the contract or in securities law. The entities were never properly created. The transfers never happened. And worse, the ownership records didn’t match reality.
Plainly, people paid for assets that may not exist—or may be held in the wrong structure. And Linqto had no reliable accounting system to untangle the mess.
You can’t run an investment business without knowing who owns what. That’s not a detail; that’s the job. Each of these issues on its own could trigger an SEC action. Combined, they became a legal disaster.
A Desperate Attempt at Rescue
Eventually, they tried to rescue the situation by merging Linqto with another company, Nikkl, which had a similar business model—focused on employee stock options—but a stronger handle on structure and legal risk.
Dan Siciliano, Nikkl’s CEO, stepped in to lead the combined entity. But it was already too late. It didn’t take long for the lawsuits and liabilities to pile up. Linqto filed for bankruptcy. Everyone who had invested through their platform essentially became a creditor, and the firm couldn’t honor its obligations.
I feel for the team at Nikkl, who were brought in to help. From what I’ve seen, Nikkl itself wasn’t particularly profitable, and Linqto’s venture capitalists seemed to think that bolting on new leadership would fix things. But you can’t fix fraud and mismanagement just by swapping out executives. As I write this article, Nikkl seems to have gone out of business to avoid being even more exposed to Linqto’s legal mess.
Mass layoffs followed—over half the staff was let go. And the 16,500 investors who thought they were getting early access to unicorns are now facing likely losses with very little recourse.
Some investors may still receive returns on their investment, as Linqto truly held shares in several early-stage startups. However, an investor who believed they owned 100 shares may discover they actually hold only 30. The outcome depends heavily on the financial structure and the final accounting of share ownership. And sorting it all out could take considerable time.
What the Industry Can Learn
I started my career in mutual fund accounting, which is a highly controlled, structured environment. In those systems, you have:
· Investment advisors picking stocks.
· Custodians holding the actual stock certificates.
· Third-party accountants doing valuations and reconciliation.
Such separation of roles creates checks and balances. Nobody can fudge the numbers in isolation.
Linqto ignored all of that. They tried to operate like many tech companies, embracing the “move fast and break things” mantra. And that works—but only sometimes.
Uber bent the regulations around taxi licensing. Airbnb ignored zoning laws. But there’s a difference between regulatory gray areas and outright legal noncompliance. Linqto broke things that can’t be broken: investor trust, accounting integrity, and contract law.
Companies like Yieldstreet and Moonfare understand this. They have sophisticated leadership teams coming from private equity and investment banking. Moreover, they have less of a wild west mentality and are more disciplined about picking which investments they make available.
That leads to more sustainable growth and allows them to scale their platforms while avoiding accounting and legal mistakes.
A Wake-Up Call for Mid-Level Managers
Linqto’s scenario sounds so unusual that you might feel it’s not a concern. But unfortunately, similar situations could be unfolding in other companies in one form or another.
If you are a manager at an investment company, it’s crucial to stay informed about behind-the-scenes developments. As demonstrated by Linqto’s recent downfall, the consequences can be severe: bankruptcy and job losses.
The question here is what you can and should do during and after this type of crisis. And the answer will depend on how well-informed you were about the situation.
If you’re in accounting, legal, or compliance and you saw something wrong, you should’ve raised it internally first. And if no one listened, you had an obligation to report it externally. I suspect that’s what happened—someone probably went to the SEC, and this is how the investigation started.
But let’s say you’re a compliance manager, but you didn’t see it coming. You should then reassess your entire audit framework and review what Linqto’s external compliance advisors have previously reported—and what was done with the information they provided.
On the other hand, if you were in marketing or sales, I wouldn’t expect you to spot the legal or accounting flaws. But maybe you noticed the leadership acting erratically. The Wall Street Journal reported that Bill Sarris wrote, “Forget what legal says,” in response to concerns about promotional emails. That was a clear red flag.
Once the situation can no longer be fixed, your primary concern should be your employability. Future employers will want to know where you were in all this. Did you enable the wrongdoing? Did you miss obvious signs? Or were you caught in the storm without the tools to navigate it?
Having the right answers to these uncomfortable questions will increase your chances of finding a new job. And it all starts with you understanding well what caused the bankruptcy and legal issues of your former employer.
Final Thoughts
Linqto built its foundation on shortcuts and failed to treat investor protections as non-negotiable.
They had the tech. They had a network. They even had early access to promising companies. But they lacked the one thing that matters most in financial services: trust built on a legally sound and transparently executed structure.
For investors, it’s a hard loss. For regulators, it’s a clear signal. And for everyone else—especially those working for platforms that handle other people’s money—it’s a case study in how not to grow.
Because in the end, if you can’t say exactly who owns what, then nobody owns anything