July 18, 2025

Houston Shareholders Push for Linqto Bankruptcy Case Transfer

News Summary

Shareholders of Linqto Inc. are demanding the transfer of the company’s bankruptcy case from Texas to Delaware. Their legal representation argues that Delaware offers better protection for shareholder rights. This comes amid allegations of corporate mismanagement by new CEO Dan Siciliano and suspicions of improper forum shopping as the company files for bankruptcy under Linqto Texas. Shareholder concerns also include issues of transparency regarding management decisions and legal inquiries from the SEC.

California — Shareholders of Linqto Inc., once a burgeoning fintech startup, are pushing for a transfer of the company’s bankruptcy case from Texas to Delaware, arguing that the move will offer better legal protections under state law. The company, which recently collapsed, has faced increasing scrutiny amid allegations of management misconduct.

The investment firm Sapien Group, representing Linqto shareholders, filed a motion emphasizing that the new management’s actions since CEO Dan Siciliano took over are infringing on shareholder rights. This transition of leadership followed the replacement of the firm’s founder, Bill Sarris. Central to the shareholders’ argument is the assertion that the current board’s maneuvers, facilitated by a strategically created corporate shell, Linqto Texas, are damaging and potentially illegal.

Linqto Texas, LLC filed for bankruptcy in the Southern District of Texas, even though the parent company is incorporated in Delaware. This shift to Texas has raised alarms among shareholders who characterize it as a case of improper “forum shopping,” where businesses choose jurisdictions perceived as more favorable based on that court’s tendencies and past rulings. The shareholders believe that a Delaware court would better safeguard their interests, given the existing legal framework regarding corporate governance.

Critics of the Texas filing argue that it exemplifies the controversial practice of forum shopping, which allows companies to file for bankruptcy in any federal court with minimal connection to the jurisdiction. This practice can enable firms to seek out judges who may be more lenient. An essential aspect of the ongoing litigation is whether Judge Alfredo R. Perez, of the Houston-based federal court, will grant the shareholders’ motion for a transfer.

The shareholding community is particularly concerned about severe allegations against Linqto’s management, including claims that previous executives misled customers about their investments in a portfolio of private companies estimated to be worth over $500 million. Reports indicate that Linqto informed its 13,600 clients about investment opportunities typically reserved for institutional investors, which raises significant ethical and legal questions.

Since Dan Siciliano’s leadership began, an internal investigation has reportedly led to the ousting of several original executives, spotlighting questionable management practices. The company has persistently failed to hold its legally required annual shareholder meetings, a critical aspect of corporate governance mandated under Delaware law. Furthermore, allegations have surfaced that the new board changed the company’s bylaws improperly and proceeded with secretive bankruptcy preparations without transparency.

In addition to internal challenges, Linqto is under investigation by the Securities and Exchange Commission (SEC) for potential violations associated with unverified customer accreditation—an essential requirement for private investments. Following the bankruptcy, Linqto aims to utilize the proceedings to raise funds to repay both customers and other creditors.

Additionally, Linqto is reportedly no longer involved in platform operations, effectively halting revenue generation since March 2023. Previous speculation about the company’s financial difficulties had circulated in various media outlets prior to the official filing, suggesting a prevailing sense of financial instability.

The bankruptcy case, lodged under Linqto Texas, LLC, has significant implications not only for its shareholders but also for the wider fintech ecosystem. While Linqto holds 4.7 million shares in Ripple, there are clarifications regarding the nature of the relationship between the two firms, which is currently nonexistent.

Additionally, former Linqto executives have initiated legal actions against the company, highlighting claims of mismanagement and securities law violations. As the case proceeds, both the stakeholders and the broader financial community will be closely watching the outcomes of the legal battles surrounding Linqto, emphasizing the need for accountability in startup management practices.

In summary, as Linqto’s shareholders work to shift the bankruptcy case from Texas to Delaware, the outcome could set important precedents regarding the obligations corporations hold towards their shareholders in times of financial turmoil.

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Author: STAFF HERE GEORGETOWN

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