XRP Lawyer John Deaton Sues Linqto CEO in Fraud Case

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Pro-XRP lawyer John Deaton has launched a securities fraud class action lawsuit targeting William Sarris, the CEO and co-founder of Linqto Inc., marking another bold step in Deaton’s advocacy on behalf of retail investors — this time including those who purchased pre-IPO Ripple shares through the Linqto platform.

The legal action, filed in a New York federal court, comes shortly after Linqto initiated Chapter 11 bankruptcy protection in Texas. The bankruptcy documents confirmed Linqto’s admission of breaching federal rules governing private equity transactions, raising further concerns about the integrity of its business practices.

Widespread Investor Impact Alleged

The XRP lawyer, in his complaint, accuses Sarris of orchestrating a multi-year scheme that embedded hidden markups of up to 60% on the sale of pre-IPO shares from high-profile companies, including Ripple. These markups significantly inflated the purchase cost for thousands of retail customers using the Linqto platform.

In addition, the lawsuit outlines how these shares were distributed through Special Purpose Vehicles (SPVs), using what Deaton claims were misleading legal exemptions and unauthorized sales methods. The lawsuit particularly focuses on exposing how Linqto operated without formal registration with both the SEC and the Financial Industry Regulatory Authority (FINRA).

Ignored Legal Warnings Amplify Liability

One of the core elements of the XRP lawyer’s filing points to internal correspondence from Linqto’s legal advisors in 2023 and 2024. According to the complaint, these internal warnings clearly outlined the legal violations in Linqto’s sale structure of SPV offerings. Despite this, Sarris allegedly persisted with the same methods, ignoring his legal team’s red flags and placing investors at increased risk.

This federal fraud complaint distinguishes Deaton’s action from Linqto’s bankruptcy proceedings, specifically targeting Sarris individually. Deaton emphasized this legal strategy was drafted intentionally to prevent Sarris from seeking refuge under the company’s bankruptcy shield. Any financial recoveries obtained from the lawsuit — whether through settlements or insurance — are aimed entirely at reimbursing harmed investors.

Global Reach of the Class Action

The class action isn’t limited by geography. Deaton clarified in a series of X posts that all Linqto customers worldwide are automatically included in the lawsuit. No formal application is required to join the class, making it more accessible to impacted users globally.

“If you live outside of America, you are also included in anything related to Linqto, private lawsuits, and bankruptcy proceedings,” Deaton wrote on X, reiterating his inclusive approach in advocating for all represented parties.

Deaton also mentioned he will explain the next steps concerning Linqto’s bankruptcy in upcoming communications. Importantly, he assured retail investors that their voices will be accounted for throughout court proceedings.

Linqto’s Legal Turmoil Gains National Attention

These developments follow recent headlines that highlighted an ongoing federal investigation into Linqto’s business operations. As coverage in major outlets like the Wall Street Journal suggests, U.S. authorities are probing the company for potential regulatory breaches linked to its equity sales practices.

According to Deaton, the bankruptcy filing itself serves as Linqto’s admission of guilt. He pointed out that since Linqto lacks formal creditors, retail customers — particularly those invested in Ripple’s pre-IPO shares — will take top priority in payment distribution once proceedings advance.

XRP Shares Remain Intact

Giving hope to impacted investors, Deaton confirmed that Linqto retains possession of the pre-IPO shares clients originally purchased, including a notable 4.7 million units of Ripple shares. This aligns with recent statements made by Ripple CEO Brad Garlinghouse that distanced Ripple from Linqto operationally.

Further optimism came from legal commentary suggesting that retail buyers of Ripple shares through Linqto stand to receive more than their initial investments, depending on future court outcomes and asset liquidations.

Related: XRP Price: $12M Max Pain for Bears

With this legal storm unfolding, the XRP lawyer’s lawsuit marks a pivotal moment in holding financial platforms accountable and safeguarding retail investors — both in the U.S. and globally.