XRP investors are at the centre of a securities-fraud class action that accuses former Linqto chief executive William Sarris of secretly imposing mark-ups of up to 60 percent on pre-IPO Ripple shares and other highly sought-after private-company equity like Uphold and Kraken sold through special-purpose vehicles on the fintech’s platform.
The 61-page complaint—Maxwell v. Sarris, filed on 9 July 2025 in the US District Court for the Southern District of New York—alleges that Sarris and unnamed accomplices acted as unregistered broker-dealers, used misleading offering exemptions and failed to deliver legal title to any of the underlying shares.
XRP Army’s Legal Champion Is Back
According to the filing, would-be purchasers were told the SPVs “held the same equity that insiders owned,” yet Linqto neither transferred the stock nor disclosed the hefty mark-ups baked into the purchase price—conduct the plaintiffs say violates Section 10(b) of the Securities Exchange Act and FINRA Rule 2040. Linqto’s own bankruptcy papers, lodged a day earlier in the Southern District of Texas, concede “historical failures to follow US laws governing the sale and marketing of private-company interests.”
Lead counsel John E. Deaton—best known for representing XRP holders in SEC v. Ripple—contends that Sarris “damaged the mission of democratising access to Silicon Valley” and misled ordinary investors: “People believed they were buying shares of Ripple, shares of SpaceX, but that’s not what they were buying.”
Because Sarris is sued in his personal capacity, Deaton argues the litigation is not stayed by Linqto’s Chapter 11 petition of 8 July 2025. The company, now led by chief executive Dan Siciliano, has secured up to $60 million in debtor-in-possession financing and says court oversight is “the only way forward” to emerge as “a profitable, law-abiding organisation” while it cooperates with SEC and FINRA investigations.
Investor outreach has proved challenging. Deaton scheduled an X Spaces session for 7:30 p.m. EST on 9 July, but abandoned the effort after repeated crashes, posting instead: “The spaces keeps crashing. We will set up a conference call early next week via phone line. I won’t do a Zoom link again because it got bombed last time.” He also reassured international users: “Anything I do includes ALL Linqto customers, regardless of where you live.”
Meanwhile, restructuring jockeying has begun. Shareholder Sapien Group says it has marshalled a majority bloc of equity and may seek to dismiss the Chapter 11 case, while Deaton has signalled plans to engage the creditors’ committee—a move endorsed by forensic accountant Rob Loh, who wrote that the panel “will have real power in the bankruptcy process.” Deaton confirmed: “Rob is correct. We will have a real say in what happens in the bankruptcy.”
Regulatory pressure is mounting on multiple fronts: Linqto disclosed parallel probes by the SEC and FINRA, and former chief revenue officer Gene Zawrotny is pursuing a wrongful-termination claim in California state court, alleging retaliation for flagging compliance failures. Deaton is now also turning up the pressure on behalf of the XRP community—particularly those who believed they were purchasing legitimate pre-IPO shares of Ripple.
At press time, XRP traded at $2.42.
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