John Deaton Blames SEC for $15 Billion Crypto Loss, Plans to Fight as U.S. Senate Candidate
Crypto-advocate attorney and U.S. Senate candidate John Deaton has blamed the aggressive regulatory policy of the U.S. Securities and Exchange Commission in the crypto space, which he said has caused small investors billions of dollars in financial losses. In a post on X recently, Deaton has claimed that more than $15 billion in losses by retail investors are a direct result of the policies put in place by them.
SEC’s Overreach and its Impact on Small Investors
Deaton, who is better known for representing thousands of XRP holders in various lawsuits, did not mince his words. He said the SEC’s enforcement policies have been nothing short of “gross overreach” and that small investors bore the brunt of such policies. “The SEC’s misconduct and gross overreach caused small investors over $15 billion. On behalf of those 75K small investors I represented, we do not accept the SEC’s apology”, Deaton said.
His comments have reignited controversy over the SEC’s handling of the fast-evolving cryptocurrency industry, amid widespread concern about retail investors being left to fend for themselves in regulatory limbo.
SEC’s Regulatory Stance Under Scrutiny
Though the crypto community has been at odds with the hard stance of the securities regulator regarding the cryptocurrency space, Deaton’s rebuke comes at an inopportune time. Being a U.S. The Massachusetts Senate candidate is gearing up to face off against incumbent Senator Elizabeth Warren, who has long talked about the need for more regulation on Wall Street. Chief among Deaton’s stated key objectives is holding the SEC accountable, citing what he says are Senator Warren’s proclaimed reservations to do so.
This critique also comes in tandem with a more recent shift in the them own position on cryptocurrencies. In a court filing disclosed by Coinbase’s Chief Legal Officer Paul Grewal, them has conceded it no longer treats the cryptocurrencies themselves as securities. This marks a sharp pivot from its earlier stance, especially concerning XRP, which had been declared a security in previous legal battles.
Calls for Regulatory Clarity
John Deaton has been among those outspoken for regulatory clarity in the crypto space for quite a while. He has stated more often than once that the SEC has utterly failed to provide guidelines on which cryptocurrencies will be treated as securities and which ones will not. A very good example could be the legal fight pertaining to XRP by Deaton, where the attorney said that the SEC is inconsistent in its approach.
All I asked was for them to honor the law and make clear that the token itself, XRP, was NOT the security. The lawyers at them not only refused to do so, but they attacked me personally, he said.
SEC’s Settlement with eToro and Broader Enforcement Actions
Deaton’s comments also were the echo of an expanded SEC crackdown on crypto firms. Recently it settled a case with trading platform eToro, which has been forced to halting U.S. operation for nearly all crypto assets and slapping the firm with a $1.5 million fine.
In this sense, the enforcement actions by the SEC have increased manifold in 2024, with reports that it has imposed a total monetary penalty of $4.7 billion on crypto companies this year alone-a 3,000% increase from 2023. Probably the most highly publicized case was that against Terraform Labs and its former CEO, Do Kwon, for a settlement amounting to $4.47 billion-the largest crypto enforcement action in history by the SEC.
State-Led Challenge to the SEC’s Authority
Pressure continues to mount on the SEC, with a coalition of seven U.S. states recently filing an amicus brief that claims the agency far overstepped its remit when it came to the regulation of cryptocurrencies. Headed by Iowa Attorney General Brenna Bird, the contingent argues that the SEC’s actions will stifle innovation and hurt a crypto industry still in its nascent stages.
As John Deaton proceeds with his campaign for the Senate, it’s evident that his battle with the SEC shall be something almost consistent with his political narrative because of the striking contrast his Senate opponent Senator Warren constitutes regarding cryptocurrency regulation.
