Linqto Files Bankruptcy Amid 60% Price Inflation Lawsuit

On July 9, 2025, a class action lawsuit was filed against William Sarris, the former CEO of Linqto, alleging securities fraud. The lawsuit, initiated by attorney John E. Deaton on behalf of numerous retail investors, accuses Sarris of inflating prices by up to 60% on shares of private companies such as Ripple and Uphold without proper disclosure. This alleged scheme potentially impacted an estimated 10,000 investors, raising significant concerns about regulatory compliance within similar platforms.

Internal memos reportedly warned Sarris about regulatory breaches, which he allegedly ignored. As a result of these accusations, Linqto has filed for Chapter 11 bankruptcy protection to restructure its finances and address regulatory compliance issues. CEO Dan Siciliano stated that seeking court-supervised protection is the only way forward to transform Linqto into a profitable and law-abiding organization. The bankruptcy filing also raises questions about the validity of underlying share ownership, particularly for Linqto's most prominent offering, Ripple (XRP).

While the lawsuit and bankruptcy filings have caused concern among investors, industry leaders have not issued substantial statements regarding the matter. The Securities and Exchange Commission (SEC) and the Financial Industry Regulatory Authority (FINRA) are actively investigating potential regulatory violations. The situation underscores the need for regulatory clarity in secondary market investments and highlights potential vulnerabilities in proxy investment platforms. Compliance with regulations is crucial to prevent similar issues in the future.

The allegations against Sarris highlight the complexities and risks associated with secondary market transactions in the digital asset space. Investors often rely on the integrity and transparency of the platforms and individuals involved in these transactions. The lawsuit against Sarris serves as a reminder of the importance of due diligence and regulatory compliance in the digital asset industry, as well as the potential consequences of non-compliance.

The legal action against Sarris is part of a broader trend of increased regulatory oversight in the digital asset industry. As digital assets continue to gain mainstream acceptance and investment, regulators are paying closer attention to the practices and behaviors of industry participants. This heightened scrutiny is aimed at protecting investors and maintaining the integrity of the market, while also fostering innovation and growth in the digital asset space.

The outcome of the lawsuit against Sarris will have significant implications for the digital asset industry. It could set a precedent for future cases involving securities fraud and regulatory compliance. The case also serves as a cautionary tale for industry participants, highlighting the importance of adhering to regulatory guidelines and maintaining transparency in their dealings. As the digital asset industry continues to evolve, it will be crucial for participants to prioritize compliance and investor protection to build trust and confidence in the market.