(Reuters) -Linqto, the investment platform that allows users access to shares of privately held companies, filed for bankruptcy on Tuesday, citing challenges stemming from alleged securities law violations.
The company is under investigation by the Securities and Exchange Commission and other regulators, CEO Dan Siciliano said in a statement.
It had discovered “serious defects in the corporate formation, structure, and operation of the business that raise questions about what customers actually own,” he added, noting that the company faces “potentially insurmountable operating challenges.”
The case underscores the risks individual investors face when venturing into private markets.
While buzzy startups like OpenAI and SpaceX have fueled interest in pre-IPO shares, the space remains lightly regulated, making it risky for those without the protections and transparency typically found in public markets.
Linqto’s voluntary Chapter 11 bankruptcy was filed in the U.S. Bankruptcy Court for the Southern District of Texas. The company has secured commitment for an up to $60 million debtor-in-possession financing from Sandton Capital Partners.
Debtor-in-possession financing allows bankrupt companies to continue operating during restructuring.
(Reporting by Niket Nishant in Bengaluru; Editing by Maju Samuel)
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