Accredited investors are falling over themselves to grab pre-IPO equity in budding cryptocurrency unicorns like BlockFi, Dapper Labs and Kraken, according to Linqto, a firm that buys equity in young tech firms before they hit the public markets.
But out of a crypto-heavy basket of unlisted company shares, Ripple Labs, creator of the XRP token, is the stock that Linqto users are buying the most.
“We don’t act like a broker, but rather we put our money upfront and buy pre-IPO tech company shares from early founders, investors and employees that need to liquidate shares for whatever reason – that might be to buy a house or send a kid to college,” Nick Burrafato, director of digital asset sales at Linqto, said in an interview.
“We also retain ownership of a percentage of each and every investment we make until the company exits," he said.
It’s perhaps no surprise there’s a strong demand for private equity in crypto companies given events like crypto exchange Coinbase’s direct listing last year. Coinbase's stock was changing hands on the Linqto platform at $32 a share just nine months before it listed at over $350, according to Burrafato.
To date, more than $50 million of private equity in Ripple Labs has been sold since Linqto launched two years ago, Burrafato said. And that’s despite the crypto firm’s legal wranglings with the U.S. Securities and Exchange Commission (SEC).
Ripple has long made its intentions of going public clear. In January 2020, CEO Brad Garlinghouse said an initial public offering was a “natural evolution” for the company, hinting that a listing could occur later that year. Following the SEC's action against Ripple Labs in December 2020, he said the firm would wait until the issue was resolved before going public.
“We were selling Ripple shares long before the SEC case,” Burrafato said. “Many of our members hold digital assets and they were emboldened by this case with the SEC, and decided they wanted to have a piece of Ripple equity as well as XRP.”
Linqto has a long-standing agreement with the Uphold trading platform to allow users to pay for their chosen slice of private equity using cryptocurrency, including XRP, which has a significant presence on the Uphold.
“Uphold has lots of users who are part of the XRP Army, if you will, so there’s an affinity there,” Uphold Chief Revenue Officer Robin O’Connell said in an interview.
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