SEC accuses Linqto chiefs of 'Wizard of Oz' investor deception

The SEC has accused the top two officers of a now-bankrupt pre-IPO investment platform of deceiving thousands of retail investors over three years.

The complaint, filed October 9 in the Northern District of California, alleges that the founder and a senior officer of Linqto, Inc. inflated prices, manufactured fake scarcity, and rigged what they told investors was an automated pricing system - all while assuring those same investors the company was in full compliance with federal securities law.

Linqto's model was straightforward. Its subsidiary, Linqto Liquidshares, bought equity in privately held companies - including billion-dollar "unicorns," meaning privately held companies valued at over $1 billion - then packaged those stakes into special purpose vehicles (essentially, investment wrappers that let retail investors buy small pieces of private company equity) and sold SPV units to retail investors through an online platform. From 2021 to 2024, those sales topped $430 million and generated more than $160 million in revenue, according to the complaint.

Prices that didn't match the company's own math

The SEC alleges the trouble started with pricing. In the summer of 2022, marketing emails told investors that SPV units reflected "current market conditions" or "'below market' valuations," the complaint says.

Internally, the company's own analysis told a different story. One company's shares were valued at $20 on Linqto's internal spreadsheets but listed at $44 on the platform. Another was valued internally at $1.75 but priced at $7.50, according to the filing.

The complaint quotes an internal email from Linqto's Director of Origination and Markets warning that the company's "elevated sellside pricing currently stands in stark contrast to the underlying value of these stocks" and that the pricing "runs the risk of attracting negative attention."

The 'feeding frenzy' playbook

Starting in June 2021, Linqto allegedly began pulling SPV units off the platform and labeling them "sold out" or "fully subscribed" - even when the company still had shares to sell, the complaint says. The goal, according to the filing, was to create a "feeding frenzy" among investors so they would rush to buy when the units reappeared.

In a March 2023 internal chat quoted in the complaint, the senior officer allegedly urged colleagues to "continue shifting investor psychology towards viewing" a popular stock "as a scarce asset that's becoming more expensive - not like water that will always be there whenever you want to turn your tap on." The founder allegedly agreed, writing they would "'go dark' this evening" and "put the higher price lot up tomorrow to create the continued FOMO," according to the filing.

The complaint alleges this tactic continued through at least July 2024.

'A little Wizard of Oz'

The most colorful allegation involves what the company marketed as "dynamic pricing." In April 2023, Linqto sent emails telling investors that SPV prices would "rise and fall based on market demand," the complaint says. Behind the curtain, company staff were still setting prices by hand, according to the filing.

The founder allegedly acknowledged this in an internal chat, telling a colleague he was acting as "a little Wizard of Oz," adding, "don't pay attention to the man behind the screen," according to the complaint. In a further message in the same conversation, the founder allegedly wrote, "we're in control of the manipulation, so no outsider can take advantage," the filing states.

Even after an algorithm went live in late May 2023, the complaint alleges the founder continued to directly adjust its inputs - sometimes multiple times a day - making the company's claims about market-driven pricing "false or misleading."

Three law firms, same warning, no action

Running alongside all of this, the SEC alleges, was a pattern of ignoring legal advice. Outside counsel warned as early as 2020 that Linqto's SPVs likely qualified as "investment companies" under a federal law called the Investment Company Act of 1940 - meaning they needed to be registered with the SEC. A second firm reached the same conclusion in January 2021. A third repeated it in October 2023, according to the filing.

The founder's alleged response, quoted in the complaint: "Doesn't matter what attorneys and accountants tell us... We will do it in a way that makes sense and if three years from now they tell us we should have done it differently we will pay the fine."

While allegedly ignoring that advice, the complaint says, Linqto sent marketing emails assuring investors it had "taken zero shortcuts" and was "meeting all relevant SEC and IRS requirements." A separate email, reviewed and endorsed by the senior officer according to the filing, told investors the company had "taken the time and resources to become Federally regulated and compliant."

Between September 2023 and at least January 2024, the complaint also alleges the company sold SPV units to investors who did not meet the wealth or income thresholds required for these types of offerings - without the proper registration to do so. Linqto's own outside counsel had recommended the company "immediately terminate" those sales, the complaint says.

Personal profit, then collapse

Both officers received bonus compensation tied to company performance, the complaint alleges. The founder also separately arranged for his wife to sell 2,000,000 shares of Linqto common stock through a venture capital firm, bringing the marital estate $4,000,000, according to the filing.

Linqto filed for Chapter 11 bankruptcy in July 2025 after new leadership uncovered what the complaint describes as "extensive and serious securities law violations." The company has not emerged from bankruptcy.

The SEC is seeking permanent bans from the securities industry, orders to return profits, and financial penalties. The agency has demanded a jury trial.

The allegations in the complaint have not been tested, and no court has ruled on the merits of the case.