A prominent lawyer representing XRP, John E. Deaton, has publicly accused the Securities and Exchange Commission (SEC) legal team of serious ethical misconduct. He claims this isn’t an isolated incident, but a pattern of behavior that calls into question the SEC’s entire enforcement strategy.
Deaton’s Explosive Claims
Deaton’s accusations, shared on X (formerly Twitter), are based on several key points:
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Court Rulings: He highlights recent court decisions labeling SEC actions as “arbitrary and capricious,” a difficult legal standard to meet, suggesting the SEC’s justifications were weak.
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Judicial Criticism: He cites a federal judge calling SEC attorneys “hypocrites” lacking “good faith” and “allegiance to the law.” These same attorneys were even sanctioned for committing fraud on the court – essentially, intentionally misleading the judge.
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Targeting Smaller Crypto Projects: Deaton alleges the SEC used aggressive tactics to bankrupt smaller crypto projects and their founders, even when the projects weren’t involved in investment schemes. He specifically mentions LBRY, claiming it was bankrupted by the SEC’s actions despite legitimate use of its token. He also points to similar treatment of Dragonchain, highlighting how they only survived due to a shift in political climate. Kraken is also mentioned as an example of the SEC’s broader strategy.
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No Hiding Behind Gensler: Deaton emphasizes that the blame can’t be shifted to former SEC Chair Gary Gensler. He argues that the attorneys involved are directly responsible and should be held accountable.
The Crypto Industry Fights Back
Deaton’s comments follow a Politico article discussing a shift in power dynamics within the crypto industry and its relationship with the SEC. With a new administration and acting SEC Chair Mark Uyeda, many enforcement actions have been halted or dropped. This has emboldened crypto leaders like Coinbase CEO Brian Armstrong and Ripple’s Stuart Alderoty to demand accountability for past SEC actions.
There’s a growing effort to stigmatize law firms hiring former SEC attorneys involved in crypto investigations. Some firms have even reportedly canceled interviews or rescinded job offers due to these connections.
While some, like former SEC enforcement director William McLucas, believe the industry should focus on moving forward instead of targeting individuals, the feeling of betrayal within the crypto community runs deep. Although there’s a call for accountability, some suggest a desire for public vindication now that the SEC’s stance has softened.
The Bigger Picture
Despite the changes at the SEC, the agency still holds significant power over the crypto market. A positive, long-term relationship with regulators remains crucial for the future of the industry. At the time of this writing, XRP was trading at $2.30.
