UPDATED LINQTO BANKRUPTCY SPACES - HOW & WHY TO VOTE

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John E Deaton
@JohnEDeaton1Jan 15, 2026

The Spaces convened John Deaton and Jeff Stein (Chief Restructuring Officer of Link to) to explain the reorganization plan, voting, and the two recovery vehicles: a Liquidating Trust (LT) and a Closed-End Fund (CEF). Stein detailed a robust, customer-first process run with the unsecured creditors committee to select managers—Forge for the LT and VanEck for the CEF—aiming for cost-effectiveness and maximum capabilities. The plan targets an estimated 95% recovery of the benefit of the bargain and a rapid emergence from bankruptcy (confirmation hearing on February 2). Voting mechanics: vote Yes on the plan; if you do not vote, your position defaults to the CEF; vote Yes without further selection defaults to the LT. LT provides direct linkage to originally purchased securities, limited quarterly liquidity, and a finite life (around five years, extendable), with forced sale if the trust ends before an IPO. The CEF is public, offers liquidity and diversification, is accessible to non-accredited investors, and may trade at a premium to NAV (no guarantees). Value in the CEF is protected via proportional allocation and independent third-party valuation of Level 3 assets. Opt-in/opt-out mutual releases apply to specific estate professionals and do not affect participation in the separate fraud class action against the founder. Cash balances can be retrieved via a process. Decisions should reflect liquidity needs, accreditation status, and portfolio composition.

Linkto Bankruptcy Plan and Customer Options: Comprehensive Summary and Q&A Notes

Participants and Roles

  • John Deaton: Host and customer counsel coordinating Q&A; recommending voting “Yes” on the plan; provided personal perspective on option selection.
  • Jeff Stein: Chief Restructuring Officer (CRO) of Linkto; appointed to oversee the restructuring process; led management selection with the Unsecured Creditors Committee (UCC).
  • Dan Ceciliano: CEO of Linkto; management team participated in bidding but was not selected for post-confirmation roles.
  • Unsecured Creditors Committee: Worked collaboratively with CRO on plan and manager selections; professionals include Brown Rudnick (referenced partners: Ken Ollet and Robert Start) and Algorithm Marcel.
  • Selected Managers:
    • Forge: Manager of the Liquidating Trust (LT).
    • Van Eck: Manager of the Closed-End Fund (CEF); major asset manager (~$180B AUM) with pre-IPO/private markets experience.
  • Other referenced parties: DX y Z Discovery Fund (a comparable closed-end fund managed by Forge’s co-founder); bankruptcy judge; customers.

Case Context and Objectives

  • Linkto filed for bankruptcy in July due to fraud within the company; court has stated on the record that this is a fraud case.
  • Objective: Protect customer assets and deliver the “benefit of the bargain” (customers receive the securities they purchased) while exiting bankruptcy rapidly to minimize value erosion from professional fees.
  • Recovery expectation: Approximately 95% of purchased value (net of bankruptcy administration costs) under the proposed plan.
  • Process integrity: CRO, board special subcommittee, management, UCC, and professionals collaborated to evaluate all viable options (approximately 10 alternatives considered). The two-customer-choice structure (LT and CEF) is positioned as the best outcome for customers under the circumstances.

Plan Overview and Voting Mechanics

  • Customers are voting on plan confirmation and their post-confirmation asset treatment (LT vs CEF).
  • Recommendation: John Deaton recommends voting “Yes” on the plan; expects judicial approval and a fast exit.
  • Defaults if customers don’t make explicit selections:
    • If you do not vote at all: Your holdings default into the CEF.
    • If you vote “Yes” and make no further selection: Your holdings default into the LT.
  • Allocation flexibility: Customers may allocate in 10% increments across LT and CEF (e.g., 100/0, 90/10, 50/50, etc.).
  • Voting logistics noted: Some customers asked about multiple ballots (e.g., 3, 4, 8, 9) — answer is “Yes,” vote on all applicable ballots. E-ballot ID location referenced (page 3); follow-up emails to be provided.

Option 1: Liquidating Trust (LT)

  • Manager: Forge.
  • Structure: Holds your exact pre-IPO securities with direct linkage to the specific companies you purchased on the Linkto platform (e.g., Ripple, Kraken, Circle, PolySign, BitPay, etc.).
  • Liquidity: Limited and not guaranteed; potential quarterly windows administratively facilitated (no assurance of market availability or price).
  • Finite life: Currently designed as a 5-year vehicle with potential to seek court-approved extensions; ultimately must liquidate. If, at the end of its term, a holding (e.g., Ripple) is still private and you have not otherwise sold, the LT will sell the shares and return cash.
  • Distributions for already public companies: E.g., Circle is public — if you allocate 70% to LT and 30% to CEF, you should receive 70% of your Circle shares (net of LT fees) directly; the remaining 30% goes into the CEF portfolio.
  • Suitability:
    • Best for customers who want direct ownership and are comfortable with limited liquidity.
    • Appropriate if you prefer to wait for specific assets (e.g., Ripple) to IPO or for occasional tender offers.
    • If your Linkto portfolio is concentrated in high-quality names (e.g., Ripple, SpaceX, Anthropic, Cerebras) and you do not need liquidity, LT may align with your objectives.

Option 2: Closed-End Fund (CEF)

  • Manager: Van Eck.
  • Structure: Publicly traded closed-end fund holding a portfolio of pre-IPO/private market securities contributed by customers who elect the CEF.
  • Accessibility: As a public vehicle, it is tradable by anyone (including non-accredited investors), providing the only pathway for non-accredited investors to gain exposure to private equity holdings via a public instrument.
  • Liquidity: Exchange-traded; can buy/sell shares subject to market conditions.
  • Potential premium/discount dynamics:
    • Market may value the CEF at NAV, a discount, or a premium. Reference: The DX y Z Discovery Fund reportedly trades at 2.5x–5x NAV at times; no guarantees for the Linkto CEF.
  • Value protection at inception:
    • Your contributed holdings are valued, and you receive CEF shares proportionate to the value you contribute relative to the total portfolio (i.e., no dilution at inception). Example: If Customer A contributes $1,000 of Ripple and Customer B contributes $500 of another asset, A receives ~67% of the initial fund shares and B ~33%.
    • Post-listing, the CEF trades based on market perception of the portfolio’s prospects, which may diverge from NAV.
  • Valuation methodology:
    • Final, independent third-party valuation will be obtained for all contributed holdings to fairly establish initial NAV (Level 3 assets; disciplined, rigorous process coordinated with Van Eck).
  • Launch timeline:
    • Confirmation hearing scheduled Feb 2; post-confirmation effective date targeted shortly thereafter.
    • All customers (including those electing CEF) will initially flow into the LT for administrative purposes once the plan is effective.
    • Van Eck will seek SEC approvals; target timeline discussed as roughly 3–4 months from effectiveness (subject to regulatory factors). Legal deadline for CEF formation currently noted as Oct 31, 2026.
  • Suitability:
    • Appropriate if you want liquidity, diversification, and a tradable instrument.
    • Useful for non-accredited investors seeking ongoing exposure to private-market names.
    • May appeal if you want exposure to companies you did not purchase on Linkto (e.g., SpaceX, Anthropic), and/or if you want to pursue potential trading at a market premium (no guarantees).

Accredited vs. Non-Accredited Considerations

  • Non-accredited investors cannot directly purchase private equity; the CEF enables exposure via a public vehicle.
  • Accredited investors may seek additional private equity via platforms like Forge or others, and may prefer LT for direct linkage while using CEF for diversification/liquidity.

Management Selection Process

  • Competitive, robust process led by CRO Jeff Stein in coordination with the UCC; broad outreach to potential candidates.
  • Forge and Van Eck selected based on cost-effectiveness, capability, and customer support considerations.
  • Linkto’s management team (led by CEO Dan Ceciliano) also submitted an independent bid but was not selected; all parties, including the management team, supported the chosen outcome.

Opt-In vs. Opt-Out Mutual Releases (Ballots)

  • Opt-in: Mutual releases among specific individuals involved in the bankruptcy process (e.g., Jeff Stein, Dan Ceciliano and similar designated parties). Opting in releases these individuals from claims related to their roles in the case and they release you from claims.
  • Opt-out: Preserves your ability to pursue claims against those specific individuals (if any exist) related to their bankruptcy roles.
  • Important clarifications:
    • The opt-in/opt-out does not involve prior management unrelated to the bankruptcy roles nor the founder-related fraud claims.
    • Opting in does not impact participation in the separate class action against the founder (Bill Saris) or other wind-down trust recoveries.
    • John Deaton’s perspective: Opt-in is largely academic; he does not see a viable claim against the CRO/others based on observed conduct (customers-first approach; collaborative resolution). The UCC takes no position.

Cash Balances and Customer Claims

  • Cash balances: Customers can retrieve remaining cash in Linkto accounts; a process is in place via the app (formal details to be circulated).
  • Claims valuation: Focus on the securities you purchased; technical claim objections do not change customer outcomes under the plan. Expect to receive your securities (or proportional value) minus estimated case costs (~5%).

Key Timelines and Process Milestones

  • Bankruptcy filed: July (last year).
  • Confirmation hearing: Scheduled for Feb 2; expected 1–2 days.
  • Effective date: Shortly after confirmation; LT expected to launch quickly post-effective date.
  • CEF formation: SEC process targeted around 3–4 months from effectiveness (subject to regulatory review); legal deadline Oct 31, 2026.

Q&A Highlights and Clarifications

  • CEF launch timing (Speaker 3): CEF requires SEC approval; Van Eck’s experience should expedite; 3–4 months is a working estimate. Until launch, CEF electors are administratively held in the LT.
  • CEF dilution risk (Speaker 3): No dilution at inception; value-based allocation of CEF shares ensures proportional ownership. Trading thereafter may reflect market perceptions of the portfolio; could be at NAV/discount/premium.
  • Opt-in effect on class action (Speaker 4): Opt-in releases only applicable to specified bankruptcy-related individuals; does not affect participation in class actions against the founder or other recoveries.
  • Cash retrieval (Speaker 5): Confirmed customers can withdraw cash via the Linkto app.
  • Fair market value determination (Speaker 6): Independent third-party valuation will establish fair value at inception; Level 3 assets framework; transparency and rigor emphasized.

Personal Allocation Example (John Deaton)

  • John’s disclosed holdings: Ripple, Kraken, Linkto, PolySign, BitPay, Circle.
  • Did not purchase certain high-profile names on Linkto (e.g., SpaceX, OpenAI, Anthropic, Cerebras, Databricks).
  • Personal choice: Likely a 70/30 split (LT/CEF), aiming to capture potential CEF premium and gain exposure to names he missed, while retaining direct linkage to core holdings; acknowledges risks and that individual circumstances differ.

Key Takeaways

  • Vote “Yes” on the plan to enable a rapid exit from bankruptcy and preserve value.
  • Choose your asset treatment based on your needs:
    • Liquidating Trust: Direct linkage, limited liquidity, finite term; suited for those willing to wait for IPOs/tender offers.
    • Closed-End Fund: Public liquidity, diversification, non-accredited access; potential to trade at premium (no guarantees); independent valuation ensures fair starting allocations.
  • Allocation flexibility in 10% increments between LT and CEF allows customization.
  • Opt-in/opt-out mutual releases are a personal choice; they do not affect class action participation.
  • Expect approximately 95% recovery net of case costs; plan represents an unusually strong outcome in a fraud bankruptcy context.

Closing Notes

  • All stakeholders (CRO, board subcommittee, management, UCC, and professionals) pursued customer-first outcomes.
  • If confirmed and implemented as planned, this case may represent one of the most successful fraud-related bankruptcy resolutions, with rapid timing and high customer recoveries.
  • Follow-up communications will address voting IDs, process details, and cash retrieval instructions; an additional Spaces session is anticipated before the final vote.