XRP Lawyer Files Class Action Suit Against Ripple Shareholder Linqto

XRP lawyer John Deaton has filed a securities fraud class action lawsuit against William Sarris, the founder and former CEO of Linqto. This legal action represents thousands of retail investors who claim they were misled by Linqto’s platform, which allegedly facilitated unlicensed securities sales.

The lawsuit accuses Sarris of orchestrating a scheme to sell shares in private companies like Ripple, Uphold, and Kraken using unregistered special purpose vehicles (SPVs).

Lawsuit Alleges Misleading Practices by Linqto

In the class action lawsuit brought against Linqto by XRP lawyer John Deaton, the founder of the company, William Sarris, is accused of hiding markups of up to 60%, using exemptions that were disclosed deceptively, and applying prohibited sales practices. According to reports, these techniques were employed to sell the stocks of various companies like Ripple and Kraken. John Deaton asserts that these were made without adhering to various SEC and FINRA regulations.

Moreover, Ripple CEO Brad Garlinghouse has already released a statement that distanced the company off Linqto, particularly in the face of federal investigations.

The filing also notes that Sarris dismissed legal warnings within the company in 2023 and 2024. These memos supposedly pointed out to him that the securities traded on Linqto were in contravention of securities laws, such as the existence of unregistered investment companies and unregistered broker dealers.

According to Deaton, these actions were taken despite clear legal counsel, leading to significant financial harm for many investors.

Linqto Bankruptcy and Customer Prioritization

Linqto is also facing bankruptcy in addition to the lawsuit. The company has been court-protected in Houston, and its new management asserts that the old executives have mismanaged the company.

They claim that Linqto lied to the customers that they had holdings in 111 privately owned businesses with worth of more than $500M. This misrepresentation is alleged to have led to the financial woes at the company.

XRP lawyer John Deaton has expressed his commitment to ensuring that customers who have invested their savings on Linqto’s platform are prioritized in the bankruptcy proceedings. He stressed that the company’s customers should be the first in line to recover any funds. Deaton’s firm is actively working to protect these customers from further losses. He has made it clear that any recovery from liability insurance or settlement would be used to help compensate the investors who were affected by these practices.

Lawsuit Continues Amid Scrutiny

Linqto’s bankruptcy follows an investigation by both the Securities and Exchange Commission (SEC) and the Financial Industry Regulatory Authority (FINRA). These regulatory bodies have raised concerns over the platform’s non-compliance with securities laws.

According to Linqto’s new management, the company discovered serious issues with its business model, especially regarding the actual ownership of shares held by its customers.

In response to the legal challenges, some Linqto shareholders have vowed to oppose the current bankruptcy plan. Sapien Group, an Australian investment firm, is one shareholder that has won the backing of 52% of Linqto shareholders. This group is consulting with bankruptcy attorneys in an attempt to fight the reorganization scheme that has been proposed by the new management.