Linqto Town Hall Summary – June 17, 2025   

Meeting held for Linqto Stockholders and Customers  

In a recent investor town hall update for stockholders and customers, the Linqto leadership team addressed critical questions about the company’s financial standing, regulatory challenges, and future strategy.  

Below is a summary of key points covered: 

Regulatory Problems Were Deep—and They’re Being Actively Addressed 
The most pressing concern is the ongoing investigation by the SEC’s Division of Enforcement, which is not a mere routine examination. The current leadership team is cooperating fully with regulators and has uncovered discrepancies that are in the process of being rectified. Internal reviews have found possible evidence of serious regulatory violations by previous management, potentially including issues with pricing disclosures and misleading claims around share ownership. 

In December 2024, Linqto hired Sean Bowden to serve as CEO of Linqto Capital, LLC. Sean brings an extensive background in regulatory compliance for broker-dealers. Sean’s team has worked to address the issues identified by the recent FINRA examination and continues to cooperate with the FINRA Enforcement investigation.  

Potentially Misleading Financial Statements 
Management undertook a review of Linqto’s historical financial statements and identified potential issues. Linqto’s historical financial statements painted a rosier picture than reality. GAAP rules were inconsistently applied; profits reflected revenue from investment offerings but did not account for corresponding liabilities. For example, previous management does not appear to have properly accounted for critical operational costs including maintenance of the series of Liquidshares and promotional “Linqto Bucks” liabilities. The result: Linqto appeared profitable when it was frequently operating at a loss.  

Linqto originally recognized as revenue the cash it received (minus the cost of the shares tendered) in connection with its participation in two Ripple tender offers in 2024. Until proper classification is determined, Linqto has removed that revenue from these financial reports. The current leadership team is working diligently to adhere to standard accounting best practices to ensure reliability in its financial reporting.  

Cost Controls and Operational Streamlining Are Underway 
A massive reduction in headcount—from 87 in February 2025 to 29 by June 2025—was a necessary step toward reducing costs and ensuring operational efficiency. On the tech and tooling front, a 75% reduction in duplicative Business Intelligence tool spend and elimination of redundant SaaS contracts has already trimmed monthly costs that once topped $777,000. Lack of centralization and user control issues have been addressed to streamline operations, enhance cross-functional processes, and create transparency and cohesion across the organization. 

Review of Linqto Financial Statements 
While legal expenditures have increased, the current leadership has been more forthcoming in recording these costs on the Profit and Loss statement. Much of this spend is associated with regulatory cleanup, SPAC termination, and remediation efforts to fix broken compliance systems. 

Although past accounting has been inconsistent and revenue is impacted due to the transaction pause, Linqto’s current balance sheet has assets to fund operations. In addition, Linqto is contemplating a potential restructuring to work through the current challenges and reorganize into a sustainable business. 

Structural Defects Present Problems  
A major concern is that Linqto marketed direct ownership of shares of the companies listed on the platform. However, Linqto Liquidshares was not properly structured as a series limited liability company, shares purchased by Liquidshares were never transferred to the series, and the series were never properly created. These structural issues raise questions about what customers actually own. Linqto’s main priority is to sort out these issues and preserve value for customers. Linqto has and continues to engage and consult with outside experts regarding this matter. 

A Publicly Traded Closed-End Fund May Offer a Way Out 
Despite the challenges, a potential path forward has emerged: transforming customer claims into shares of a publicly listed, self-managed closed-end fund. This structure would help Linqto address the regulatory compliance issues and would offer improved liquidity and more transparency. While contingent on regulatory approval and restructuring, this vision could preserve customer value and reposition Linqto as a sustainable, compliant investment platform. 

To our Customers 
We are actively working to preserve the value of your investments, and we feel a strong sense of responsibility to those affected. As we continue through this rapidly evolving situation, we’re gaining a clearer understanding each day and will continue to share updates as the situation evolves. We believe that if we can navigate this challenging period, there’s meaningful potential in the business model—a publicly traded closed-end fund that provides more liquidity, increased transparency, and opportunity for growth. 

To our Shareholders 
We remain focused on strengthening and improving Linqto’s operations. The situation is dynamic, but our understanding continues to deepen daily. We see long-term opportunity for the business and believe that the insight gained during this period paves the path for a sustainable model with a competitive advantage. 

Thank you for your continued trust and patience and for being a valued member of our community.