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Prominent pro-XRP attorney John Deaton has started a class action lawsuit against Linqto and its founder, William Sarris, accusing them of defrauding crypto investors through illegal and deceptive practices in the sale of private company shares, including Ripple. The legal action, filed on July 9, is a major development for the crypto community, especially those impacted by Linqto’s sudden collapse earlier this year.
The lawsuit alleges that Sarris orchestrated a years-long scheme to profit from undisclosed markups and misleading exemptions, ultimately charging retail investors up to 60% more than the actual value of shares in private companies. These sales were allegedly conducted without proper regulatory oversight, violating both SEC and FINRA rules.
According to Deaton, who has been a leading voice in the XRP community and a vocal supporter of retail investors’ rights, the lawsuit is aimed at securing maximum financial recovery for affected users. Deaton also hopes to stop Linqto from negotiating smaller settlement deals that would reduce payouts to those harmed by the platform’s actions.
The lawsuit details how Linqto offered investment opportunities in companies such as Ripple, Kraken, and Uphold using Special Purpose Vehicles (SPVs), which are designed to hold shares on behalf of investors. However, Deaton argues that these sales were conducted in violation of federal securities laws, as Linqto acted without the necessary licenses, failed to disclose material information, and misused legal exemptions meant for qualified investment vehicles.
“Thousands of investors were misled by hidden fees, unlawful practices, and a complete lack of transparency,” Deaton said. “This lawsuit is about protecting retail investors who were promised access to top-tier investment opportunities but instead were exploited.”
One of the most serious allegations in the complaint is that Linqto was repeatedly warned by regulators. Both the SEC and FINRA reportedly cautioned the company in 2023 and 2024 about their operations, yet Linqto continued to sell shares without registering as a broker-dealer or investment company.
This led to a financial collapse, with Linqto filing for bankruptcy earlier this year. The company has been largely inactive since March, following the suspension of its operations. According to bankruptcy attorney Samuel A. Schwartz, Linqto now plans to raise funds to pay off creditors by securing loans, including a $60 million line of credit from Sandton Capital Partners.
“We believe we have the necessary resources to make meaningful distributions to customers,” Schwartz stated. Still, the firm is likely to propose a payout plan that must be approved by regulators and voted on by creditors. Deaton, however, remains concerned that such plans may favor institutional creditors over individual retail investors, a situation he aims to prevent through the class action process.
For many XRP holders and broader crypto investors, this case highlights long-standing concerns about the transparency and fairness of private equity sales in the digital asset space. It also underscores the challenges retail participants face when trying to access early-stage investment opportunities that are often dominated by insiders and large institutions.
Deaton’s decision to take legal action comes as XRP itself is showing renewed signs of momentum. The token recently experienced a 10% rally and is trading in a crucial technical zone that analysts say could be a signal for the beginning of a broader bull run. With Ethereum also pushing toward a $3,000 breakout and Bitcoin sitting at record levels, market sentiment is improving—but trust in crypto platforms remains fragile, particularly in the wake of incidents like Linqto’s collapse.
As the class action lawsuit progresses, it could serve as a bellwether case for investor protections in the digital asset sector. If successful, it may force other platforms to adhere to stricter compliance measures and improve transparency for retail buyers. It could also reaffirm the role of legal advocates like Deaton, who have emerged as watchdogs for crypto investors amid an industry still wrestling with regulatory clarity and accountability.
In the coming weeks, all eyes will be on how the court responds to the allegations and whether the case moves forward to discovery and trial. Meanwhile, Linqto’s bankruptcy attorneys continue working behind the scenes to finalize a restructuring proposal, hoping to avoid protracted litigation. But with Deaton representing thousands of aggrieved investors, the legal battle is far from over.
