Linqto, the investment platform that let users access shares of privately held companies, filed for bankruptcy on Tuesday, citing challenges stemming from alleged securities law violations.

The company’s move comes after months of investigation by the Securities and Exchange Commission and the Financial Industry Regulatory Authority, Wall Street’s self-regulator.

Linqto had discovered “serious defects in the corporate formation, structure, and operation of the business that raise questions about what customers actually own,” its CEO, Dan Siciliano, said, adding that the company faces “potentially insurmountable operating challenges.”

The case underscores the risks individual investors face when venturing into private markets.

While buzzy startups like OpenAI and SpaceX have fueled interest in pre-IPO shares, the space remains lightly regulated, making it risky for those without the protections and transparency typically found in public markets.

Linqto suspended its operations in March after becoming aware of the extent of its previous non-compliance with securities laws, the company said in its court filing.

Seeking Chapter 11 bankruptcy protection will allow Linqto to preserve the value of its assets and assess strategic alternatives, it added.

Linqto holds $500 million worth of shares in 111 companies on behalf of its customers, according to the filing.

The company filed its motion in the U.S. Bankruptcy Court for the Southern District of Texas. It has secured commitment for an up to $60 million debtor-in-possession financing from Sandton Capital Partners.

Debtor-in-possession financing allows bankrupt companies to continue operating during restructuring.

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(Reporting by Niket Nishant in Bengaluru; Editing by Maju Samuel)