--- title: "How Linqto’s investment structure worked" language: en canonical: https://osint.v3rta.com/dossiers/linqto/investment-structure/ as_of: 2026-10-09 keywords: ["Linqto","Liquidshares","Linqto Capital","private market investments","series interests","Chapter 11","customer recovery plan","Sandton financing","Forge trustee dispute","corporate governance","securities proceedings"] --- # How Linqto’s investment structure worked **Question.** What did a customer buy, and who held the securities? **Answer.** Customers bought indirect series interests. Liquidshares held issuer securities, while series formation, transfer and equitable ownership were contested. ## Series units and the securities holder - Analysis: The platform operated from February 2020 until the March 2025 shutdown. The declaration dates its operating background through March 14 but says customer-facing operations were suspended March 13. It offered economic exposure through series units. The disclosure statement describes Liquidshares buying and holding securities, allocating intended economic interests to series and paying Parent a service fee. In limited early transactions, Parent lent Liquidshares the acquisition funding. This mechanism distinguishes the platform operator, securities holder and customer interest. [s-d144] [s-d6] - Analysis: The debtors’ customer FAQ said the certificates did not represent direct portfolio-company ownership and that customers were creditors whose claims would be determined in bankruptcy. It distinguished withdrawal requests for wallet cash from later recovery of securities and exit-event proceeds. The company’s February 2025 archived FAQ described customer cash in a JPMorgan Chase omnibus account held by Liquidshares for customers’ benefit. [s-d98] [s-d151] ## Formation and transfer defects - Analysis: New management’s June 17, 2025 account acknowledged that Liquidshares had not been properly structured as a series LLC, the series had not been properly created and securities had not been transferred to them. The amended schedules specify missing Delaware certificate provisions. The CRO declaration adds that no series schedules were created and that the master purchase agreement was only signed June 1, 2024; the contemplated transfer to Liquidshares Manager was never implemented. [s-d72] [s-d96] [s-d134] - Attributed: The CRO declaration says no series schedules were created, the master purchase agreement was only signed June 1, 2024, and securities were never transferred to Liquidshares Manager despite its provisions for series recordkeeping. [s-d134] - Qualification: The declaration says securities were never transferred to Liquidshares Manager; the extraction's wording about its books cannot be strengthened into actual custody by the manager. - Analysis: Linqto’s May 9 statement said an outside adviser compared stock records on two equity-management platforms with investor records and found no discrepancies with its internal analysis. The company also said Liquidshares appeared on issuers’ capitalization tables. Those company-announced stock checks establish a different proposition from valid series formation or direct customer ownership. [s-d74] ## Prices, fees and the complaint’s account - Analysis: The disclosure statement records a 10% customer charge during April 2023–August 2024, collected by Liquidshares and booked to nondebtor Capital. It was initially described as a brokerage commission and later as a redemption fee. Separately, the customer complaint alleges acquisition-price markups commonly of 20–60% and sometimes 150%, and improper treatment of at least 5,000 investors as retail customers. Its reported investment-transaction totals are not audited profit figures. [s-d144] [s-d147] - Analysis: Plaintiffs allege that Linqto marketed through Braze without regard to accreditation and used its own financial-sophistication test from December 2023. They quote a 2023 legal memorandum recommending changes to markups, offerings, series documentation and Form D practices. The retained account is the complaint’s quotation of that memorandum, rather than a complete original legal opinion or an agency ruling. [s-d147] - Analysis: The complaint describes alternative funding routes: securities bought by Linqto and sold to Liquidshares, or interest-bearing secured loans from Linqto to series that bought directly from sellers. It also alleges paid Rainmaker supervisory services through approximately December 2022, comprising 2.5% of sales and brokers’ commissions of at least 1.35%, passed to investors. These are plaintiffs’ pleaded mechanisms; they do not establish Rainmaker’s control of Linqto. [s-d147] - Analysis: The Ripple swap allegations distinguish two episodes. In December 2023–January 2024, plaintiffs describe a $55 customer exchange price against Ripple’s $61 tender. The June 20, 2024 offer instead stated a $61.48 equivalent price, a 10% trading fee and a $54,000 limit. Plaintiffs allege that the tender purpose was undisclosed and that original and replacement positions also bore markups. [s-d147] - Analysis: Plaintiffs quote an operating agreement effective January 21, 2020–January 1, 2024 providing a 0.5% annual series management fee. Applying company-reported aggregate investments, they estimate at least $850,000 for 2022 and $1.5 million for 2023. Those figures are their arithmetic, not audited receipts. The complaint also alleges 164 similarly named Ripple series and quotes a warning that regulators might treat them as one issuance, defeating the claimed investment-company exemption. [s-d147] - Analysis: The complaint attributes an October 25, 2024 warning memorandum to Jack Drogin, Jodi Jamison and Susan Woodard. Its criticism of the autofill setting in Plaid identity verification concerns Linqto’s configuration, not an adjudicated violation by Plaid. These allegations remain distinct from a judicial determination of the underlying conduct. [s-d147] ## Regulatory assessments and the title compromise - Analysis: The debtors’ disclosure statement assessed Inc as likely an unregistered broker or securities-swap execution facility, and Liquidshares as likely an unregistered investment company. It also assessed Liquidshares and its manager as likely advisers requiring registration. These are qualified debtor conclusions. Capital’s own exemption report says it was not operational in 2025 and held no customer assets or accounts; its permissions do not establish compliant operation throughout the group. [s-d144] [s-d79] - Analysis: FINRA’s inquiry into Capital covered customer and anti-money-laundering checks, disclosures, net capital, commissions, records and ATS/FOCUS filings. The disclosure statement called the SEC and FINRA investigations ongoing at its own date; it cannot exclude later action. [s-d144] - Analysis: In the September 2025 title dispute, the debtors argued that Liquidshares purchased the securities and held legal title, while customers had contracted for series interests. The committee and Deaton parties answered that customers had been promised SPVs, independent custody and protection from bankruptcy, pointing also to K-1 forms. The compromise avoided a title trial and specified customer treatment. The confirmed plan retained issuer transfer and first-refusal restrictions rather than guaranteeing direct, unrestricted delivery. [s-d70] [s-d144] ## Sources - [s-d144] Court record source · s-d144 - [s-d6] Court record source · s-d6 - [s-d98] Company statement source · s-d98 - [s-d151] Company statement source · s-d151 - [s-d72] Company statement source · s-d72 - [s-d96] Court record source · s-d96 - [s-d134] Court record source · s-d134 - [s-d74] Company statement source · s-d74 - [s-d147] Court record source · s-d147 - [s-d79] Linqto Capital financial statements and exemption report for 2025, U.S. Securities and Exchange Commission EDGAR, 2026-03-26 - [s-d70] Court record source · s-d70