Former Linqto Chief Revenue Officer, Gene Zawroty, has taken legal action against the Delaware investment company, along with two of its executives, for a variety of allegations, including fraud and market manipulation.
Zawroty filed the lawsuit in Santa Clara County, California on October 7, 2024. Despite the fact that the lawsuit was initiated a few weeks ago, the news only recently came to public attention. Notably, well-known XRP community figure Eri brought the case to the public’s awareness through an X post yesterday.
In the lawsuit, Zawroty, a former executive of Linqto, claims that he was unfairly dismissed by the company for raising concerns about its non-compliance with regulations. He alleges that Linqto engaged in insider trading, putting its own interests above those of its customers. Zawroty also accuses Linqto of using unlicensed brokers and providing misleading information about its user base.
Specifically, Zawroty claims that Linqto falsely stated that it had over 750,000 users when, in reality, it only had 10,000 users, with just 30% of them being accredited. Additionally, the lawsuit alleges that Linqto inflated share prices beyond the recommended 150% by FINRA. It is claimed that Linqto uses a unique algorithm to artificially increase share prices with each sale, creating a false sense of demand among investors.
Other allegations against Linqto include bypassing SEC rules, deceptive marketing practices, and failure to comply with FINRA standards. Zawroty asserts that Linqto and its executives were aware of these issues but chose to ignore them. He also accuses Linqto of breaking promises made to him, such as offering a competitive salary and good stock options, only to terminate his employment 107 days after hiring him to prevent his stock from vesting and avoid addressing compliance issues.
Zawroty considers his termination unjust and damaging to his career and financial stability. As a result, he is seeking injunctive relief, attorney’s fees, as well as punitive, general, and special damages.
Founded in 2018, Linqto enables investments in private markets with a minimum investment of $2,500, allowing investors to buy stocks in various companies. Last year, it added Ripple’s pre-IPO stock to its platform.
Furthermore, Linqto announced plans to use XRP as a payment method for its tokenized private equity proof-of-concept shortly after U.S. Federal Judge Analisa Torres ruled that XRP is not a security.
Ripple CTO David Schwartz has endorsed Linqto as a legitimate investment platform, highlighting its approach to facilitating investments in companies like PolySign, where Schwartz serves on the board. This article is for informational purposes only and should not be considered financial advice. Readers are encouraged to conduct their own research before making investment decisions.