Pro-XRP lawyer John Deaton has responded to a recent statement by Paul Grewal, Chief Legal Officer of Coinbase, with a sharp criticism of the US Securities and Exchange Commission. Grewal questioned the SEC’s understanding of investment contracts in connection with cryptocurrencies.
He emphasized that the term “investments” does not inherently constitute “investment contracts” and pointed out that investment contracts must entail rights to the future income, profits, or assets of an enterprise. This view aligns with the SEC’s own stance in the Edwards case presented before the Supreme Court, where the SEC described investment contracts as having the character of “debt [or] equity participation.”
John Deaton’s Response: A Critique Of SEC’s Approach
Reacting to the post on X, John E Deaton, known for his role as amicus curiae in the Ripple vs. SEC case and a former federal prosecutor, expressed his disapproval of the SEC’s conduct. He responded to Grewal’s statement with a sweeping condemnation of the SEC’s actions.
As a former federal prosecutor, I can tell you that U.S. Government Attorneys are truly supposed to wear the white hat. Simply by standing up and saying in open court, “I represent the United States” should send shivers down ones’s spine. When I used to say it, it was with pride… https://t.co/M48Q5Mk5Mr
— John E Deaton (@JohnEDeaton1) January 7, 2024
Deaton reflected on his experience as a prosecutor, emphasizing the gravity and honor of representing the United States. “As a former federal prosecutor, I can tell you that US Government Attorneys are truly supposed to wear the white hat. Simply by standing up and saying in open court, ‘I represent the United States’ should send shivers down one’s spine,” Deaton recalled, contrasting this with the current practices at the SEC and the Department of Justice (DOJ).
The pro-XRP lawyer further elaborated on the expected ethos of federal prosecutors, who should be governed by adherence to the law and the pursuit of justice. “But federal prosecutors, whether civil or criminal, are supposed to be governed by the law and the notion of justice,” Deaton explained. He admitted that while a competitive spirit and a desire to win are natural, these should stem from the pursuit of justice and adherence to the law.
“When I used to say it, it was with pride and honor. Lawyers at the SEC, and the DOJ, for that matter, have lost sight of that honor and privilege,“ Deaton added, further highlighting the fundamental differences between attorneys representing private entities like Ripple or Coinbase and federal prosecutors.
He pointed out that while private attorneys are bound to act solely in the interest of their clients, federal prosecutors should be guided by the law and the concept of justice. “But federal prosecutors, whether civil or criminal, are supposed to be governed by the law and the notion of justice,” the pro-XRP lawyer stated, adding that this should be their guiding principle.
XRP Lawsuit Showcases Hypocrisy And Inconsistency
Deaton also focused on the SEC’s alleged inconsistency and hypocrisy, as highlighted by Judge Netburn in the Ripple case. He quoted Netburn, “Lawyers at the SEC, like Jorge Tenreiro, and Gurbir Grewal, lack faithful allegiance to the law and care much more about winning the argument and advancing their agenda.” This issue, according to Deaton, is not isolated to the Ripple case but is a recurring theme in various legal battles, including those involving Grayscale, the Voyager Bankruptcy, and DebtBox.
This criticism isn’t isolated to Deaton’s observations but is echoed by federal district and appellate court judges in various cases, including Ripple, Grayscale, Voyager Bankruptcy, and DebtBox.
“It’s so bad a federal judge may be issuing sanctions against SEC lawyers. They have lost sight that they are supposed to wear the white hat and represent the United States with honor and integrity, with justice serving as their guiding principle,” Deaton remarked.
In the end, his statement culminates in a call for accountability at the SEC, suggesting that firings should start with Gary Gensler, followed by SEC Enforcement Director Tenreiro, among others.
Coinbase’s next court date is set for January 17, 2024, when the court will hear Coinbase’s motion for judgment in its legal battle against the SEC. This follows the SEC’s denial of Coinbase’s crypto rulemaking request on December 15, 2023, leading to Coinbase filing a petition for court review on December 18, 2023.
At press time, XRP traded at $0.55818.
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