Former Linqto Executive Gene Zawrotny Sues Company for Retaliatory Termination
On Monday, October 7, 2024, Gene Zawrotny filed a complaint in the California Superior Court, Santa Clara County against Linqto, Inc., a Delaware-based investment platform, along with its executives Bill Sarris and Joe Endoso. The lawsuit alleges multiple claims, including retaliation in violation of California Labor Code § 1102.5, fraudulent inducement, breach of the implied covenant of good faith and fair dealing, and quantum meruit.
Zawrotny, who served as Linqto’s Chief Revenue Officer for a brief period, contends that he was wrongfully terminated after raising concerns about significant compliance violations within the company. According to the complaint, Zawrotny’s employment lasted only 107 days, during which he made substantial contributions that led to the company securing important financial deals.
The lawsuit outlines that Zawrotny was recruited to Linqto, which facilitates investments in private-market startups and pre-IPO companies, based on promises of a competitive salary, a signing bonus, and stock options. He was reportedly assured that the company was valued at approximately $300 million, with expectations of growth to nearly $1 billion shortly thereafter. These assurances were made to entice Zawrotny to join the firm, as noted in the complaint.
Upon joining Linqto, Zawrotny quickly identified several compliance issues. He discovered that many of Linqto’s users were unaccredited investors, despite the company’s offerings being limited to accredited investors. Zawrotny raised alarms about this and other compliance concerns, including misleading marketing practices and unlicensed brokers operating within the firm. He organized weekly meetings to address these issues, which included key executives, but the complaint states that no corrective action was taken.
The complaint alleges that Linqto’s executives were aware of these violations yet chose to ignore them. Zawrotny claims that he was terminated less than two months after voicing his concerns, suggesting that the decision was retaliatory and aimed at eliminating his salary obligations as well as ensuring that his stock options would never vest.
Linqto, which has been promoting itself as a platform for investments in promising tech companies—including those in the cryptocurrency sector—continues to face scrutiny. The complaint highlights that Zawrotny’s termination was not only unjust but also detrimental to his career and financial well-being.
In addition to the accusations of retaliation, Zawrotny’s lawsuit alleges that Linqto made fraudulent misrepresentations regarding his employment terms and the company’s financial status. He argues that the company had no real intention of retaining him as an employee for any significant duration, using his expertise and public profile to enhance its market position before dismissing him.
The lawsuit seeks general and special damages, punitive damages related to the retaliation claim, and attorney’s fees. Zawrotny also demands injunctive relief to prevent further loss and damage.
Last month, Linqto announced the termination of its $700 million merger deal with Blockchain Coinvestors Acquisition Corp. The decision, effective September 26, follows a decline in the SPAC market due to poor financial performance and increased regulatory scrutiny. As part of the termination, Linqto will incur a $5 million fee to Blockchain Coinvestors.
Please contact BlockTribune for access to a copy of this filing.
