Crypto News – SEC Backs Down on Cryptocurrencies as Securities in Latest Court Filing
Crypto News – A prominent pro-crypto attorney and US Senate candidate, John Deaton, has voiced strong criticism against the US Securities and Exchange Commission (SEC), accusing the regulator of causing significant financial losses to retail investors. According to Deaton, the SEC’s excessive intervention in the cryptocurrency industry has led to retail investors losing over $15 billion.
In a Sept. 13 post on social media platform X, Deaton stated:
“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, who is a pro-XRP lawyer, argued that the SEC should be held accountable for its actions. He emphasized that Senator Elizabeth Warren has not taken action to hold the SEC accountable, and he plans to do so if elected.
Deaton’s Senate Run and Legal Victory
Deaton’s statement comes just two weeks after he won the Republican nomination for the US Senate in Massachusetts. He is set to challenge Democratic Senator Elizabeth Warren in November. His criticism of the SEC is likely to be a central issue in his campaign, especially considering his strong pro-crypto stance.
SEC Backpedals on Cryptocurrencies as Securities
In a surprising development, the SEC has seemingly shifted its stance on cryptocurrencies. According to a Sept. 13 court filing, the SEC clarified that it does not view cryptocurrencies as securities. This is a significant departure from its previous position, which often categorized tokens, like XRP, as securities.
The SEC stated in its amended complaint against Binance:
“The SEC regrets any confusion it may have invited” by falsely and repeatedly stating that tokens themselves are securities.”
This statement, shared by Coinbase’s chief legal officer Paul Grewal on social media, marks a drastic shift from the SEC’s earlier positions. The SEC’s previous actions, particularly against XRP, were highlighted by Deaton:
“All I asked, was for the SEC to honor the law and make clear that the token itself (XRP) was NOT the security. The lawyers at the SEC not only refused to do so, but they attacked me personally.”
SEC’s Aggressive Enforcement Record in 2024
The SEC has had an unprecedented year in 2024 when it comes to crypto enforcement. On Sept. 12, the SEC reached a settlement with eToro, forcing the US division of the trading platform to halt trading for nearly all crypto assets and pay a $1.5 million fine.
This settlement is part of a broader trend. By Sept. 10, the SEC had imposed $4.7 billion in enforcement actions against crypto firms and executives, representing a staggering 3,000% increase from 2023. This surge was primarily driven by the SEC’s $4.47 billion settlement with Terraform Labs and its former CEO Do Kwon in June, which was the largest enforcement action in the SEC’s history.
Despite taking 19 fewer enforcement actions in 2024 compared to 2023, the regulator’s 11 actions this year have generated a massive 3,018% increase in fines and penalties.
FAQ
What did John Deaton claim about the SEC’s actions?
John Deaton, a prominent pro-crypto lawyer and Senate candidate, claimed that the Securities and Exchange Commission’s (SEC) overreach in regulating the cryptocurrency industry has cost retail investors over $15 billion. He criticized the SEC for its enforcement-heavy approach and vowed to hold the agency accountable for its actions.
Why is the SEC being criticized by the crypto community?
The SEC is criticized for its aggressive enforcement actions against crypto companies, often without clear regulations. The agency has imposed significant fines and penalties, which some argue hurt small investors rather than protect them. Critics, like John Deaton, claim that the SEC’s approach has led to massive financial losses for retail investors.
What is the SEC’s stance on cryptocurrencies as securities?
In a recent court filing, the SEC clarified that cryptocurrencies themselves are not considered securities. This marks a significant shift from the agency’s previous stance, where it treated certain tokens, like XRP, as securities. The SEC admitted that its previous communications might have caused confusion regarding this issue.
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