Pro-XRP lawyer John Deaton files a federal securities fraud class action against William Sarris, the co-founder and CEO of Linqto Inc.
Deaton filed the class action in New York on Wednesday on behalf of thousands of retail investors who purchased pre-IPO shares of top companies, such as Ripple, via the Linqto platform.
The suit comes less than a day after Linqto filed for Chapter 11 bankruptcy protection in the state of Texas. According to the bankruptcy filing, Linqto admitted to failing to follow the rules governing the sale and marketing of private equity stakes.
Attorney Deaton’s Main Argument
A few hours after Linqto’s bankruptcy filing, Deaton filed a federal securities class action against Sarris on behalf of retail investors.
The attorney alleged that Sarris orchestrated a multi-year scheme involving undisclosed markups of up to 60% on the prices of pre-IPO shares in private companies. This caused investors to pay significantly more than the actual value of the shares.
The complaint also accused Sarris of relying on misleading exemptions and unlicensed sale tactics to sell pre-IPO stock of private companies via special purpose vehicles (SPVs).
Sarris Ignored Warning About US Law Violations
Additionally, Attorney Deaton asserted that Linqto operated as a broker-dealer for several years without obtaining the required registrations from the SEC and FINRA.
The complaint stated that Linqto’s legal team flagged these violations in internal memos from 2023 and 2024. Its lawyers warned that Linqto was violating multiple U.S. laws in the way it sold and structured the SPV offerings.
However, the complaint alleged that Sarris ignored these warnings and continued using the same sales tactics.
Attorney Deaton, who represented thousands of XRP holders in the Ripple lawsuit, emphasized that the latest securities fraud class action specifically targets Sarris. This is part of an effort to prevent him from hiding under bankruptcy protection.
Interestingly, Deaton stated that any recovery, whether through a settlement or liability insurance, would be directly channeled to retail investors to fully compensate them.
Class Action Applies to All Linqto Customers
In a series of X posts, Deaton confirmed that the class action applies to all Linqto customers, including those residing outside the United States. According to him, Linqto retail customers are not required to submit any official application to join the class action.
“If you live outside of America, you are also included in anything related to Linqto, private lawsuits, and bankruptcy proceedings,” Deaton wrote on X.
Additionally, he promised to discuss the next steps of Linqto’s bankruptcy proceedings later today. The pro-XRP lawyer stated that investors would have a voice in the bankruptcy proceedings.
Rob is correct. We will have a real say in what happens in the bankruptcy. https://t.co/2n9gqcQQCD
— John E Deaton (@JohnEDeaton1) July 9, 2025
Linqto’s Debacle
Meanwhile, Linqto has been in the news since last month, following a Wall Street Journal report that confirmed federal authorities are investigating Linqto for potential violations of U.S. laws.
The company admitted its wrongdoings this week through the bankruptcy protection filing. As previously reported, Deaton claimed that since Linqto has no creditors, its retail users would get paid first before equity shareholders.
Furthermore, he reassured retail investors that Linqto still holds the underlying pre-IPO shares of private companies. Notably, the lawyer referenced a statement from Ripple CEO Brad Garlinghouse, who confirmed that Linqto has 4.7 million units of Ripple’s pre-IPO shares.
He added that users will receive more than the amount they invested in these pre-IPO shares.
DisClamier: This content is informational and should not be considered financial advice. The views expressed in this article may include the author's personal opinions and do not reflect The Crypto Basic opinion. Readers are encouraged to do thorough research before making any investment decisions. The Crypto Basic is not responsible for any financial losses.
