Linqto, Inc. has announced its continued pursuit of litigation against Forge Global, Inc. and its owner, The Charles Schwab Corporation. The company is seeking full monetary damages to compensate more than 13,000 Linqto customers for harms caused by the defendants. Additionally, Linqto is requesting the repayment of all legal fees associated with this case while implementing risk mitigation strategies to facilitate a rapid exit from its current bankruptcy proceedings.
Litigation Against Forge and Schwab
The legal action follows what Linqto describes as a breach of contractual commitments. On July 15, 2026, Forge, acting under instructions from Schwab, reportedly broke its commitment to serve as the trustee for the Liquidating Trust. This role was a critical component of the confirmed Plan of Reorganization. Linqto CEO Dan Siciliano stated that the refusal to fulfill this obligation has prevented the company from exiting bankruptcy, which was expected to occur just days after the breach. The company notes that this sudden withdrawal occurred without warning, following several weeks of failed negotiations. Linqto is now pursuing alternative risk mitigation strategies to ensure the bankruptcy process concludes as quickly as possible, especially if Forge continues to refuse its agreed-upon performance.
Customer Asset Value and Bankruptcy Context
The current legal dispute is layered upon a prior Chapter 11 bankruptcy filing in July 2025, which Linqto attributes to fraudulent actions by its former management. Despite the ongoing litigation and bankruptcy status, Linqto emphasizes that the securities intended for customer transfer remain safe and secure. Notably, the value of customer-linked securities has seen a significant increase during this period. The valuation rose from $657 million in June 2025 to $1.3 billion as of May 2026. This substantial growth in asset value underscores the high stakes involved in the dispute over the Liquidating Trust's administration. The company remains focused on protecting customer recovery while navigating the complexities of the reorganization plan and the unexpected withdrawal of the designated trustee.
Key Takeaways
- Linqto is seeking full monetary damages and legal fee repayment from Forge Global and Charles Schwab.
- The dispute stems from Forge's refusal to serve as trustee for the Liquidating Trust as required by the reorganization plan.
- The value of customer-linked securities has grown from $657 million in June 2025 to $1.3 billion in May 2026.
FinanceInsyte's Take
In our view, this litigation highlights the systemic risks inherent in relying on third-party trustees to execute reorganization plans. The fact that a major entity like Schwab, through Forge, could abruptly withdraw from a contractual trustee role creates significant uncertainty for the 13,000 affected customers. This signals that even with a confirmed Plan of Reorganization, the stability of bankruptcy exits is heavily dependent on the continued cooperation of designated service providers. For financial infrastructure leaders, this underscores the necessity of robust contingency planning for trustee failures.
Questions & Answers
How does the breach by Forge affect the timeline for Linqto's bankruptcy exit?
The breach occurred on July 15, 2026, just days before the planned exit. Because Forge withdrew from its commitment to serve as trustee for the Liquidating Trust, Linqto has been forced to extend its bankruptcy proceedings and seek alternative risk mitigation strategies.
What is the current valuation of the securities held for Linqto customers?
The value of customer-linked securities has increased significantly during the bankruptcy process, rising from $657 million in June 2025 to $1.3 billion as of May 2026. Linqto maintains that these assets remain safe and secure.
What specific damages is Linqto seeking in its lawsuit?
Linqto is pursuing full monetary damages to compensate its more than 13,000 customers for harms caused by Forge and Schwab, as well as the full repayment of all legal fees connected to the litigation.
What caused the initial Chapter 11 bankruptcy filing in July 2025?
Linqto attributes the initial filing for Chapter 11 bankruptcy protection to the fraudulent actions of the company's prior management.
Source: BUSINESSWIRE
