Pro-XRP Lawyer Critiques SEC’s Legal Team

John E. Deaton Delivers a Blistering Assessment

Renowned for his staunch support of XRP, attorney John E. Deaton has launched a vigorous critique against the Securities and Exchange Commission (SEC) on March 17. Deaton accuses the SEC’s legal team of unethical behavior that he argues transcends a single enforcement case, raising questions about both the agency’s enforcement strategy and the personal integrity of its legal staff.

Highlighted Failures in SEC’s Legal Approach

Deaton’s argument begins with a focus on recent appellate court rulings that deemed the SEC’s actions “arbitrary and capricious.” He highlights the rarity of meeting this legal standard, implying an absence of any plausible justification for the agency’s conduct. Deaton further bolsters his critique by referencing a separate federal judge’s condemnation of SEC lawyers as “hypocrites” lacking “good faith” and “faithful allegiance to the law.” The fact that these attorneys were sanctioned for committing fraud upon the court, Deaton notes, underscores a deliberate attempt to mislead the judiciary to win cases.

Impact on Smaller Crypto Projects

Deaton also shines a light on the predicaments faced by smaller cryptocurrency initiatives and their founders. He cites the case of Jeremy Kauffman and the LBRY project, which he claims was “bankrupted” by aggressive SEC actions despite the token’s legitimate non-investment use. Similar pressures were faced by Joe Roets and Dragonchain, who managed to endure due to a shifting political landscape. Deaton also alludes to Kraken, suggesting that the SEC’s enforcement strategy has broader implications for the entire cryptocurrency industry.

Accountability Beyond Leadership

Concluding his remarks, Deaton asserts that the legal team cannot deflect responsibility onto former SEC Chair Gary Gensler, stating, “These lawyers don’t get to hide behind Gensler made me do it. They’ve earned it. Period.” His comments were in response to a Politico article by Declan Harty, titled “Italian vendetta: SEC targeted by triumphant crypto industry,” which outlines a power shift in Washington following the appointment of acting SEC Chair Mark Uyeda.

Industry Push for Accountability

According to Politico, prominent figures in the cryptocurrency sector, including Coinbase CEO Brian Armstrong, Ripple’s chief legal officer Stuart Alderoty, and Gemini co-founders Cameron and Tyler Winklevoss, are advocating for the SEC to implement clearer regulatory guidelines. Additionally, they are calling for accountability among agency staff for perceived misconduct under previous leadership.

Industry’s Deep-Rooted Discontent

The article highlights how some crypto leaders aim to stigmatize law firms that employ senior SEC attorneys who previously managed crypto investigations. A former SEC employee, anonymously quoted in the article, revealed that at least one interview was canceled and a job offer rescinded due to the firm’s crypto connections. William McLucas, a former SEC enforcement director, criticizes the targeting of agency staff as “totally inappropriate” and suggests that the crypto industry should focus on future progress rather than labeling lawyers as outcasts.

The Path Forward

Despite the SEC’s leadership changes and reduced enforcement actions, the agency continues to be a key regulatory authority in the cryptocurrency market. Observers note that a constructive long-term relationship with regulators remains vital for shaping effective policy. Ripple’s Alderoty emphasizes the focus on “accountability — not retribution,” although anonymous sources indicate that some in the crypto realm are seeking vindication as the SEC’s stance evolves.

Current Market Status

At the time of reporting, XRP was trading at $2.30.