Linqto, the bankrupt fintech platform that had attracted thousands of users by promising investors access to early-stage tech startups, is escalating its legal fight against Forge Global Holdings and its parent Schwab, after Forge did not honor a court-ordered contractual obligaton to help protect customers who were harmed in a massive fraud.
The San Jose-based company said Forge backed out of its court-ordered role just days before it was set to begin distributing recovered assets to more than 13,000 customers of the collapsed private-markets platform.
In a Monday afternoon statement, Linqto said it will keep pursuing litigation to recover monetary damages tied to Forge's decision, along with legal fees, and is simultaneously exploring alternative paths to exit Chapter 11 protection as quickly as possible if Forge continues to withhold cooperation.
Forge had been designated trustee of the liquidating trust under Linqto's confirmed plan of reorganization, a role that included holding customer assets, managing share transfers and administering the recovery process. On July 15, just five days before the trust was scheduled to launch, Forge informed Linqto it would not perform those duties, citing demands from Schwab, which had acquired Forge in a deal that was completed earlier this year.
Linqto and its official committee representing unsecured creditors responded by filing a complaint in the U.S. bankruptcy court for the Southern District of Texas, asking the court to compel Forge to honor its contractual commitments, according to coverage of the case by Bloomberg.
"In today's hearing, the UCC and John Deaton expressed frustration with Forge. We agree. It's intolerable and wrong that Linqto is still in bankruptcy because of the unwillingness of Forge and Schwab to fulfill their obligation to serve as trustee of the Liquidating Trust," said Dan Siciliano, chief executive of Linqto.
The two sides told a judge in late July they were working toward a resolution, and a hearing in the matter was pushed back while negotiations continued, court dockets tracked by Law360's bankruptcy desk show.
InvestmentNews has reached out to Schwab for comment on the lawsuit and Linqto's allegations.
The case traces back to claims that Linqto's former chief executive, William Sarris, misled customers into believing they were purchasing direct equity stakes in sought-after private companies. Two customers sued Sarris in July last year in federal court in Manhattan, alleging he exploited investors' fear of missing out on shares in companies like Ripple, according to Reuters.
"Unfortunately, Bill Sarris has not only not fulfilled that mission, he has damaged it," plaintiffs' attorney John Deaton said at the time. "People believed they were buying shares of Ripple, shares of SpaceX, but that's not what they were buying."
In reality, the equity stakes Linqto sold were held through special purpose vehicles rather than transferred directly to customers, a structure that later complicated the bankruptcy recovery. Creditor attorney Kenneth Aulet told a court hearing last year that distributing shares directly to the roughly 8,000 customers who believed they owned a piece of Ripple would have triggered securities-law consequences that Ripple itself would likely contest.
"This is a fraud case," Aulet said. "What Linqto promised and what it delivered are very very different."
Linqto filed for Chapter 11 bankruptcy protection that same month. Shortly after, FINRA enforcement began looking into Linqto Capital, the fintech platform's broker-dealer unit, as part of a broader investigation to uncover what went wrong as well as any violatons that may have been committed.
“The company is currently the subject of an ongoing investigation by FINRA Enforcement, as well as potential involvement in a broader SEC investigation focused on the company's parent and its affiliated fund, Liquidshares,” according to a FINRA filing with the SEC disclosing the probe. “The company is fully cooperating with all applicable regulatory inquiries.”
“Linqto convinced Mom and Pop investors they were getting entrance to how the 1% invest in private or alternative investments,” Scott Silver, managing partner of Silver Law Group, who represents a plaintiff, said at the time. “In reality, customers were getting pre-IPO stock at unfair valuations.”
Sarris resigned as chief executive in January 2025 and was formally terminated in March of that year, though he remained on Linqto's board, according to bankruptcy filings.
The dispute lands on top of a recovery process that has already stretched more than a year. Linqto filed for Chapter 11 protection in Texas in July 2025 after new management uncovered what the company described as historical failures to comply with U.S. securities laws governing the marketing and sale of private-company stakes. The bankruptcy estate includes interests in roughly 111 private companies valued at more than $500 million, including stakes in Ripple and SpaceX.
A federal bankruptcy court confirmed Linqto's reorganization plan in February, with support from about 95% of voting customers. Under that plan, customers can choose to receive shares in a publicly listed closed-end fund, hold interests in a liquidating trust, or take a combination of both.
Linqto said that the value of the underlying customer-linked securities has climbed from $657 million in June 2025 to $1.3 billion in May 2026, even as the legal wrangling over who administers the payout has intensified.
Even amid the Forge dispute, the bankruptcy estate has managed to generate proceeds for customers. A U.S. Bankruptcy Court in July approved the sale of roughly $130 million in Ripple common shares to four institutional buyers, led by Galaxy Digital, with proceeds directed to the wind-down trust supporting customer recoveries. Ripple waived its right of first refusal to allow the sale to proceed.
Linqto has not said when it expects to formally exit bankruptcy, but the company reiterated Monday that the underlying securities held for customers "remain safe and secure" no matter how the Forge dispute is resolved.
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