Former Exec Sues Linqto, a Firm Selling Ripple Shares, for Fraud and Market Manipulation

Former Linqto chief revenue officer Gene Zawrotny has filed a lawsuit against the Delaware-based company that sells Ripple shares.

The lawsuit, filed on October 7 in California’s Santa Clara County, included two Linqto executives as defendants. 

Zawrotny accused the investment company and its execs of market manipulations, fraud, insider trading, unlicensed brokerage operations, etc.

Details of Zawrotny’s Complaints 

Crypto Eri, a prominent XRP community figure, shared details of the latest Linqto case in a recent X post. The plaintiff, Zawrotny, formerly a chief revenue officer at Linqto, claims he was wrongly sacked for voicing concerns about the company’s compliance violations.

He claimed the Delaware investment firm engaged in insider trading, prioritizing gains over customer needs. The plaintiff also accused Linqto of using unlicensed brokers and false user base claims.

In his complaint, Zawrotny alleged that Linqto’s claim of having more than 750,000 users is untrue. The court filing stated that the investment company only boasts 10,000 users, and only 30% of these customers are accredited.

Furthermore, the complaint stated that Linqto increased its share prices above the 150% recommended by FINRA. The firm also allegedly uses a special algorithm to mark up share prices upon each sale.

The technique created an artificial market that drives demand by making investors believe that shares were almost sold out.

Other Non-Compliance Allegations Against Linqto For Selling Ripple Shares

The previous complaint alleged that Linqto evaded SEC Rule 506(b) and used misleading market tactics. It also accused the firm of failing to adequately comply with FINRA guidelines. 

The plaintiff claimed the company and its executives intentionally ignored these concerns. Further, Zawrotny said Linqto failed to fulfill its promises to him. The company allegedly promised to give the plaintiff good stock options and a competitive salary.

However, Linqto allegedly failed to live up to these expectations. Instead, it sacked Zawrotny 107 days after he was recruited. He also claimed the company terminated his employment to stop his stock from vesting and dodge addressing the compliance concerns he raised.

Zawrotny described his termination as unjust and damaging to his career and financial welfare. Thus, the plaintiff seeks injunctive relief, punitive, special, and general damages, including attorney’s fees.

Established in 2018, Linqto offers private market investments, starting with a minimum of $2,500, offering investors easy entry into the stock market. Linqto allows investors an opportunity to invest in the stocks of different companies, including Ripple. 

In 2022, the company listed Ripple’s pre-IPO stock on its platform. While Ripple has yet to conduct an IPO, Linqto offers shares representing its investment in the blockchain payment company. The company has repeatedly announced that it sold out Ripple shares via X posts.

Additionally, last year, Linqto announced plans to include XRP as a method of payment for its tokenized private equity proof-of-concept. In March last year, Ripple chief technology officer David Schwartz also confirmed Linqto as a legitimate investment platform.

He shed light on the company’s strategy and how it facilitates investments in firms like PolySign, of which Schwartz is a board member.