Will Ripple Pre-IPO Shares Be Affected As PolySign Up for Sale After Loan Default

PolySign, a digital asset service provider with ties to Ripple, is now on a foreclosure auction sale after defaulting on its debt, leading to questions about its pre-IPO shares.

Crypto Eri, a prominent XRP community figure, recently highlighted the development, citing an official press release. The media release suggests that the company and its subsidiaries are now up for an auction sale next year due to a default on its debt.

Details of the PolySign Auction

Per the announcement, PolySign entered into a loan and security agreement with Boathouse Capital, a private equity company, last April. To facilitate the loan, PolySign pledged its assets, including equity interests in itself and its subsidiaries and intellectual property rights. 

Now that the firm has failed to repay the loan, the agreement demands that it be sold alongside its subsidiaries to compensate the lender Boathouse Capital. The foreclosure sale will take place on Jan. 5, 2024, at the offices of Latham & Watkins in New York.

The press release says the sale will also be accessible online and by phone. The assets to be sold include 100% equity interests in six subsidiaries of PolySign, as well as trademarks and patents related to blockchain, distributed ledger system, and master key escrow process.

The sale is open to eligible participants who meet the terms and conditions set by Boathouse Capital, the lender. Interested parties are advised to contact Lakewood Advisors, the financial advisor to the lender, at least seven days before the sale date.

Does This Affect Ripple?

Eri expressed shock at the development. She questioned what would happen to the investors who purchased pre-IPO shares on Linqto. Some community members have misunderstood this question to mean Ripple’s pre-IPO shares.

Notably, Eri was asking about PolySign’s pre-IPO shares purchased by investors on Linqto. As The Crypto Basic reported in March, Ripple CTO David Schwartz affirmed that Linqto was a safe place to buy PolySign pre-IPO shares.

Apparently, several investors have been purchasing PolySign shares, awaiting an IPO from the firm. Linqto facilitates investments in companies like Ripple and PolySign before they go public, giving customers an early advantage. 

However, there is the risk of a collapse, merger, or outright sale of the company involved. Linqto outlined these risks in its guide to pre-IPO investments. Nonetheless, the firm confirmed that it would reach out to affected investors to advise them on the next step if a company is sold. 

It bears mentioning that PolySign has no official partnership with Ripple. As a result, the latest development involving its auction sale does not affect Ripple or its pre-IPO shares in any way.

The only relationship between both companies is the shared executives. David Schwartz, Ripple’s CTO, is a board member and advisor to PolySign. In addition, Arthur Britto, co-founder of Ripple, is also the founder and president of PolySign. 

When Ripple acquired Metaco in May, the XRP community questioned why the company did not go for PolySign, seeing as Metaco and PolySign offer similar services. Schwartz noted that PolySign has a different roadmap to Ripple.

With PolySign now up for sale, pundits speculate the possibility of Ripple coming up to bail out the firm. However, this remains speculative.