Pro-XRP Lawyer Criticizes SEC for Overreach
Prominent lawyer John Deaton, known for representing XRP holders in the Ripple-SEC lawsuit, has strongly criticized the US Securities and Exchange Commission (SEC) for its actions against LBRY Inc., a blockchain company. Deaton believes that the SEC’s conduct in this case exemplifies overreach on the part of the regulatory body. He argues that the LBRY case is significant not only because it applies the Howey Test to blockchain technologies and crypto but also because it highlights the SEC’s overreach.
Deaton Slams SEC for Targeting Smaller Companies
Deaton further criticizes the SEC’s decision to target LBRY Inc., which he considers a relatively smaller entity, instead of investigating larger questionable activities within the crypto sector. According to Deaton, the SEC chose to go after a small American company based in New Hampshire, threatened to bankrupt it during the investigation, and ultimately caused its bankruptcy, even though there was no fraud or misrepresentation involved.
Real Scammers Ignored by SEC
In contrast, Deaton points out that the SEC seems to have turned a blind eye to actual scammers in the crypto ecosystem. He mentions FTX, Celsius Network, Voyager, Luna, Genesis, and other pump and dumps as potential targets that the agency could have investigated and stopped to protect US retail investors. However, these companies were allowed to cause significant damage without facing regulatory action.
LBRY Inc. Ceases Operations
In response to LBRY Inc.’s announcement of ceasing operations due to unsustainable debts and challenges posed by the SEC, Deaton expressed his disappointment. The company initially faced a $22 million fine from the SEC, which was later reduced to $111,000 considering LBRY’s financial difficulties. As a result, LBRY withdrew its appeal and began winding down operations, with all executives, employees, and board members resigning.
Deaton Highlights Inefficiency of SEC
Deaton emphasizes the inefficiency and failure of the SEC by pointing out the millions of dollars spent on the LBRY case, resulting in a $130,000 fine. He believes that this case alone proves the SEC to be a broken and inept agency. Deaton’s condemnation extends beyond the financial aspects to include the regulatory approach and discernment exercised by the SEC in choosing its battles within the crypto landscape.
Crypto Community Shows Resilience
Despite LBRY Inc.’s challenges, the crypto community has expressed disappointment but also resilience. Community members have pledged to support LBRY’s open-source blockchain network, Odysee, demonstrating their commitment to the decentralized ethos.
Hot Take: The SEC’s Overreach and Inefficiency
John Deaton’s scathing critique of the SEC highlights the regulatory body’s overreach and failure to address real scams in the crypto sector. The targeting of smaller companies like LBRY Inc., while larger questionable activities go unchecked, raises questions about the SEC’s priorities. The inefficiency displayed by wasting millions of dollars on a case that resulted in a relatively small fine further undermines confidence in the agency’s abilities. This case serves as evidence that the SEC is a broken and inept agency that needs reform.
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