John Deaton, a well-known legal advocate for XRP holders, has provided an update on the Linqto bankruptcy proceedings. Deaton shared that customers may have a higher priority than equity shareholders, raising hopes for a full recovery of their investments. Linqto, which allowed users to invest in private crypto companies, is currently facing legal challenges linked to alleged securities violations.

Customers May Be Prioritized in Linqto Bankruptcy Case

John Deaton stated that Linqto customers could be at the top of the repayment list. In a recent statement on X, he noted, “There are no creditors in line before Linqto customers.” Deaton’s comments were aimed at calming investor concerns, especially for those with large sums tied up on the platform.

The XRP lawyer mentioned that around 11,500 Ripple SPV unit holders could be affected. He added that customer investments may be recovered, possibly in amounts greater than their original value. Deaton said, “Some people have their life savings on the platform… they SHOULD get MORE than the value of their initial investments.”

Linqto Faces Legal Scrutiny Over Private Share Sales

Linqto is under investigation by the U.S. Securities and Exchange Commission (SEC) and the Department of Justice (DOJ). Former CEO William Sarris is accused of selling Ripple shares at a 60% markup without disclosing this to customers. This sale reportedly generated a $2 million profit.

Ripple CEO Brad Garlinghouse clarified that Linqto obtained its Ripple shares through secondary market transactions. “Ripple has no direct business relationship with Linqto,” he said. Ripple CTO David Schwartz also explained that users do not directly own shares but hold parts of legal entities that own them.

Understandably, there have been many questions from those who believed they were buying Ripple shares from Linqto, and what happens next. To be clear, on Ripple’s end:

What we know from our records is Linqto owns 4.7M shares of Ripple, solely purchased on the secondary market… https://t.co/XHstpwwmIL

— Brad Garlinghouse (@bgarlinghouse) July 2, 2025

Deaton revealed that shares in companies such as Ripple, Circle, and SpaceX are accounted for in the bankruptcy records. He also said that 3% of Ripple shares sold without investor consent are being handled separately, with the funds from those sales still available.

Refund Proposal Draws Concerns Over Valuation Losses

Deaton raised concerns about Linqto’s initial refund plan. The company proposed refunding customers only their original investments. This raised questions from those whose assets have appreciated over time. Investors who bought pre-IPO shares in firms like Circle and Ripple expect to receive value based on current valuations.

Deaton shared an example from his account. He invested $30,000 in Circle shares, which grew to $157,000. He warned that returning only the original sum would lead to major losses for users. Deaton stressed the need for fairness, transparency, and a proper legal process.

He also revealed that three former employees and three influencers had large personal investments in Linqto. These individuals claim they were unaware of internal issues. Deaton noted that the court process would include public access to internal and external communications, including marketing-related emails.