DigiTecK

Super Ugly @linqtoinc Update With bankruptcy coming in days, "expect customers will likely be transformed into unsecured creditors who will have to wait in line to get paid." From boiler room sales tactics to selling to customers in Iran & North Korea, there were many more violations in between. “This is guerrilla warfare. Take no prisoners. Throw everything we have at this one targeted date…influencers, marketing, ads, social, calls and smokesignals.” - Email from Bill Sarris on Jan. 5, 2023. To recap some of the highlights of the article: Linqto Founder Bill Sarris was trying to unload shares of @Ripple, to Linqto’s 11k users, at a price👉60% higher than paid. The SEC generally prohibits markups above 10% but Sarris pushed ahead, not disclosing the hike to customers, and pocketed $2M. This looks to be securities fraud. The SEC and DOJ are also investigating whether Sarris improperly sold an additional 16,000 shares of Ripple without permission. 🤑Boiler-room Sales Operation In its rush to sign up more users, Linqto also pushed other boundaries, buying email lists that contained prospects from Iran and North Korea. They signed up roughly 100 customers who said they were from those countries, according to people close to the situation. In 2022, Sarris urged a manager to increase the price of software company PolySign to $3.25 per share to boost revenue by $600,000. “We can turn it into a Unicorn via our platform,” Sarris said in an email. At the end of 2023, Linqto learned that Ripple, which remains private, was preparing to buy back shares from customers at roughly $61 each. Linqto reached out to customers, who were in the black on their Ripple investments and convinced them to sell 144,000 shares of Ripple back to the company at an average of $55 per share, according to people close to the situation. It then sold them all to the crypto company at the higher offering price, booking more than $8 million in revenue. Ahead of the deal, Linqto hired an external law firm to conduct a review of its business practices. The law firm came back with a damning 18-page memo—written a few months after the Ripple “Spike Day”—warning the company that it was potentially violating multiple federal laws, including antifraud provisions of U.S. securities laws. The external lawyers advised Linqto to “immediately cease” charging markups for shares. In September 2024, Linqto abandoned the SPAC merger. A short time later, the SEC informed the company it was starting an investigation into its business. Linqto’s own lawyers were also sending warning signals. In an eight-page memo, they worried that its tactics were potentially illegal and outlined roughly a dozen recommended changes, including no longer allowing its customers to “self certify” that they were accredited and avoiding any possible exposure to “severe civil or even criminal penalties,” according to the memo. For the full read: wsj.com/finance/investing/li…