The US Attorney's Office for the Southern District of New York has unsealed a six-count indictment against Linqto founder William Sarris over an alleged $450 million pre-IPO investment fraud. The charges include securities fraud, broker-dealer fraud, wire fraud and conspiracy, and cover conduct from 2020 through 2025.
Former Chief Executive Officer Joseph Endoso, who succeeded Sarris after serving as president, pleaded guilty on August 27 to securities fraud, broker-dealer fraud and two conspiracy counts. The Department of Justice said he is cooperating with the government.
"William Sarris is innocent of these charges and intends to defend himself," his lawyer, Tim Treanor, told Reuters. A lawyer for Endoso did not immediately respond to the news agency's request for comment. Sarris is presumed innocent unless proven guilty.
How the platform sold private-company exposure
Linqto gave retail investors exposure to private company shares through special-purpose vehicles rather than operating as a traditional broker. It acquired shares in private companies and sold customers units in vehicles that provided economic exposure to those shares, creating hundreds of them for popular issuers, according to the indictment.
Prosecutors say more than 13,000 customers bought exposure this way while Linqto controlled both the available inventory and the price shown on its platform. Private-company shares do not have the transparent prices available on public exchanges, and Linqto customers did not buy the shares directly.
Alleged markups and pricing tactics
The spread was Linqto's revenue. Prosecutors allege the median markup over its acquisition price was about 60%, with more than one-quarter of sales carrying markups above roughly 80% and some exceeding 200%.
Linqto also allegedly displayed offerings as sold out when inventory remained, a tactic prosecutors say created fear of missing out and allowed the company to raise the price of the remaining interests. An Automated Market Maker introduced in 2023 was presented to customers as pricing securities through supply and demand, but the indictment says it was not fully automated and that Sarris changed its parameters to increase daily revenue.
Registration questions
Two lawyers told Sarris that Linqto's transaction-based compensation could require broker-dealer registration, prosecutors allege. Linqto obtained approval for a broker-dealer entity in 2023, but the registered entity sat largely unused while the company continued routing most offerings through a separate company.
The indictment says the vehicle structure also served a regulatory purpose. Linqto capped each special-purpose vehicle at 99 investors, then created another for the same issuer, which prosecutors say was intended to avoid registration and fee disclosures under the Investment Company Act.
Prosecutors allege the pricing practices also increased Linqto's reported revenue and the potential value of Sarris's equity. His 2023 compensation package included about 1.9 million restricted units that would vest after a qualifying sale, listing or capital raise valued at $500 million or more.
Platform collapse and bankruptcy
By January 2025, prosecutors say Sarris tendered more than $18 million of shares already allocated to customer vehicles without obtaining their consent or notifying them. Linqto suspended its platform in March and sought Chapter 11 protection in July.
A first-day bankruptcy filing said the company held securities in 111 private businesses with an estimated fair value above $500 million. New management said it found historical securities-law problems and questions about what customers owned.
Under Linqto's reorganization plan, confirmed by a Texas bankruptcy judge on February 13, customers may choose between interests in a liquidating trust and a publicly listed closed-end fund holding private-company shares.
Wider private-market access routes
Linqto's model is one of several routes used to put private-company exposure in individual accounts, alongside direct allocations, tokenized claims, derivatives and private-market vehicles, which carry different ownership and pricing rights. Webull gives accredited investors access to late-stage companies through special-purpose vehicles, each limited to 99 eligible investors, the same threshold that appears in the Linqto indictment.
In Europe, Trade Republic partnered with Apollo and EQT to offer private-market funds from EUR 1, while fund managers have warned about liquidity and mis-selling risks. Tokenized products add another layer between the buyer and the company: Robinhood's 2025 OpenAI and SpaceX tokens drew questions from the Bank of Lithuania, and OpenAI said the tokens were not its equity.
