John Deaton Asserts SEC’s Firm Crypto Position Led to $15 Billion Loss

John Deaton, a prominent attorney advocating for cryptocurrency and a candidate for the U.S. Senate, has accused the Securities and Exchange Commission (SEC) of inflicting substantial financial damage on small investors through its regulatory practices concerning cryptocurrencies.

In a recent update on X, Deaton stated that the SEC’s actions have resulted in losses surpassing $15 billion for retail investors.

Deaton, who has represented numerous XRP holders in legal matters, asserted that the SEC’s enforcement actions represent “gross overreach,” significantly affecting small investors.

“The SEC’s misconduct and gross overreach caused small investors over $15 billion. On behalf of the 75K small investors I represented, we do not accept the SEC’s apology,” Deaton expressed.

SEC Under Fire for Its Aggressive Regulatory Approach

His remarks come at a time when the SEC is facing heightened scrutiny for its assertive regulatory stance towards the cryptocurrency sector.

Deaton, who secured the Republican nomination for the U.S. Senate in Massachusetts, is preparing to contest Democratic Senator Elizabeth Warren in the forthcoming November election.

He emphasized his intention to hold the SEC accountable, particularly as he believes Senator Warren has been hesitant to do so.

On January 1, 2021, I filed a Writ of Mandamus against the @SECGov asserting that the SEC had breached 75 years of legal precedent by claiming the token itself was a security.
I noted that orange groves, condos, chinchillas, digital assets, and even beavers , had been… https://t.co/N4EVLkNiaR

— John E Deaton (@JohnEDeaton1) September 13, 2024

The criticism of the SEC aligns with a surprising change in the agency’s perspective on cryptocurrencies.

In a court document shared by Coinbase’s Chief Legal Officer, Paul Grewal, the SEC admitted that it no longer considers cryptocurrencies themselves to be securities.

“The SEC regrets any confusion it may have caused” by previously implying that tokens themselves were securities,” the SEC’s revised complaint against Binance included a significant statement.

This marks a shift from the SEC’s prior stance, especially concerning XRP, which had been categorized as a security in earlier legal conflicts.

Deaton has consistently advocated for clarity in the SEC’s regulation of cryptocurrencies, contending that the agency’s actions have frequently been inconsistent.

He highlighted the SEC’s unwillingness to provide clear guidance on XRP, which resulted in an extended legal struggle.

“All I requested was for the SEC to adhere to the law and clarify that the token itself (XRP) was NOT the security. The lawyers at the SEC not only declined to do so, but they also personally attacked me,” Deaton noted.

SEC Reaches Settlement with eToro

In the meantime, the regulator recently settled a case with trading platform eToro, compelling its U.S. operations to halt trading in nearly all crypto assets and imposing a $1.5 million penalty.

This is merely one instance of the SEC’s intensified enforcement actions in 2024.

According to a report from Social Capital Markets dated September 9, the SEC’s total monetary enforcement actions against crypto firms in 2024 have soared to $4.7 billion, reflecting a 3,000% increase from the previous year.

The regulator’s most significant action occurred in June, when it secured a $4.47 billion settlement with Terraform Labs and its former CEO, Do Kwon, marking the SEC’s largest crypto enforcement to date.

Recently, a coalition of seven U.S. states has united to contest the SEC’s regulation of cryptocurrency.

Led by Iowa Attorney General Brenna Bird, the states have submitted an amicus brief arguing that the SEC’s efforts to regulate cryptocurrencies represent a “power grab” that would hinder innovation, damage the crypto industry, and exceed the agency’s jurisdiction.

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