Crypto Crusader Deaton Drops Bombshell Fraud Lawsuit Against Linqto and Former CEO

XRP's fiercest defender just went on the offensive—with a legal grenade.

John Deaton, the attorney who became a crypto folk hero during Ripple's SEC battle, just filed a scorching fraud lawsuit against private investing platform Linqto and its ex-CEO. The move sends shockwaves through digital asset circles—and raises fresh questions about transparency in crypto investing.

When the guy who took on the SEC calls foul, you know the allegations are serious. Deaton's complaint alleges Linqto misled investors about everything from financials to executive compensation—basically Crypto Finance 101 for how not to run a company.

The timing couldn't be more brutal. Linqto, which specializes in pre-IPO tech investments, recently pivoted hard into digital assets. Now their credibility hangs by a thread—and Deaton's got the scissors.

Another day, another crypto firm learning the hard way that when the music stops, the lawyers get paid first. The case could become a landmark for investor protection in digital markets—or just another cautionary tale in an industry that collects them like NFTs.

TLDR

• XRP lawyer John Deaton has filed a class action lawsuit against Linqto and its former CEO William Sarris.
• The lawsuit accuses Linqto of selling unlicensed securities through unregistered special purpose vehicles.
• Investors claim they were misled about the ownership and value of private company shares like Ripple and Kraken.
• The lawsuit alleges Sarris ignored legal warnings in 2023 and 2024 about securities law violations.
• Linqto is currently under bankruptcy protection in Houston as new management investigates past mismanagement.

Thousands of retail investors are now represented in a new securities fraud class action lawsuit targeting Linqto and its former CEO. XRP-affiliated attorney John Deaton filed the complaint, alleging deceptive sales practices and violations of securities regulations. The case also involves bankruptcy proceedings and scrutiny from federal regulators.

Linqto Accused of Misleading Private Investors

Attorney John Deaton has accused Linqto’s founder, William Sarris, of orchestrating unlicensed securities sales through deceptive SPV structures. These sales involved shares in private firms, including Ripple, Uphold, and Kraken, through unregistered vehicles that bypassed regulatory oversight. Deaton claims this activity caused significant harm to retail investors.

The lawsuit alleges Sarris concealed markups as high as 60% and misused legal exemptions to avoid transparency. Reports show Linqto marketed shares in firms without proper disclosures, which allegedly misled thousands of users. Deaton also argues that prohibited sales methods violated SEC and FINRA rules.

Additionally, internal documents reportedly warned Linqto’s leadership in 2023 and 2024 about these regulatory violations. Despite receiving legal memos, Sarris and other executives allegedly ignored the alerts and continued operations. The filings state that this inaction contributed directly to investor losses.

Bankruptcy Woes Add Pressure to Lawsuit

Linqto is now operating under court protection in Houston while undergoing bankruptcy restructuring amid ongoing legal action. The company’s new leadership claims the previous management misrepresented the firm’s holdings and overall valuation. They assert Linqto falsely claimed to hold stakes in over 100 private companies worth more than $500 million.

According to court filings, Linqto’s customers believed they had ownership in these assets, but evidence suggests otherwise. Investigations indicate serious flaws in how share ownership was communicated and recorded. These inconsistencies have become central to the investor lawsuit and bankruptcy proceedings.

Attorney Deaton emphasized prioritizing customers in any financial recovery that results from litigation or insurance claims. His legal team is pushing for investor reimbursement before other creditors. Linqto’s financial state has drawn attention from regulators and investors due to the scale of the alleged misconduct.

🚨NEW: Attorney @JohnEDeaton1 has filed a securities fraud class action against @linqto founder and ex-CEO William Sarris on behalf of thousands of retail investors.

The suit alleges Sarris orchestrated a multi-year scheme using undisclosed markups (as high as 60%), misleading…

— Eleanor Terrett (@EleanorTerrett) July 9, 2025

Shareholder Dispute Over Reorganization Plan

Some Linqto shareholders are opposing the bankruptcy plan proposed by the new management, citing a lack of transparency and fairness. Australian firm Sapien Group has emerged as a leading opponent, claiming support from more than half of all shareholders. The group is working with attorneys to contest the proposed reorganization strategy.

These shareholders argue the current plan could prevent a full investigation into past mismanagement and possible asset misrepresentation. They believe creditor interests may be prioritized over rightful investor claims. The group is actively exploring legal options to halt the current bankruptcy process.

Meanwhile, the SEC and FINRA continue their joint investigation into Linqto’s operations and regulatory compliance. Regulators have expressed concerns about potential breaches of securities laws and possible unlicensed broker-dealer activities.