Lawyer John Deaton knocks SEC after Coinbase rejection

John Deaton responded to news about the U.S. SEC rejecting Coinbase’s plea. In a Tweet that went out on May 16, Deaton states that SEC is a broken agency that doesn’t honor its core mission statement.

A complex question

Coinbase, a prominent cryptocurrency exchange in the U.S., filed a lawsuit in April, alleging that the SEC’s response to their petition has been unreasonably delayed. In a court filing on May 15, the SEC responded by dismissing Coinbase’s assertion that the agency has already reached a decision as “baseless.” 

Coinbase’s chief legal officer, Paul Grewal, responded to this announcement, inviting his followers to take a look at the SEC brief for themselves, prompting a range of answers from the Twitter community.

One of the most notable being from John Deaton, the founder and host of CryptoLaw, a platform established in 2021 to offer digital asset holders insights and news about regulatory advancements in the United States.

Although I agree with @iampaulgrewal that there are good people on staff working at the @SECGov, I believe the SEC, as an institution, is indefensible. It is a broken agency that does not honor its core mission statement. The DAO Report was July 2017, followed by the ICO Craze. https://t.co/IN4u6qDDbI

— John E Deaton (@JohnEDeaton1) May 16, 2023

In his Twitter thread, comprised of four messages, Deaton highlights the history of the SEC, pointing to the “57 cases involving digital assets” between 2017 and 2020, where XRP was untouched. He continues that it was in 2019 that the SEC issued the framework for digital assets.

In 2019 the SEC issued its Framework for Digital Assets and said a virtual currency used for payments and as a substitute for fiat was unlikely to satisfy the Howey test.

Btw, #XRP was designated a virtual currency utilized in a decentralized payment system in 2014 by @USGAO.

— John E Deaton (@JohnEDeaton1) May 16, 2023

Ongoing discussions

The SEC was designed to regulate and oversee the securities industry, protect investors, maintain fair and orderly markets, and facilitate capital formation.

However, this is not the first time that questions and debates regarding the effectiveness of the SEC in fulfilling its intended role.

Critics argue that the SEC has faced challenges in effectively detecting and enforcing regulations and responding promptly to emerging issues in the rapidly evolving financial landscape.

Some people question the SEC’s ability to adapt to technological advancements, particularly in the realm of cryptocurrencies and digital assets.

These criticisms and questions highlight ongoing discussions on how the SEC can enhance its effectiveness and responsiveness to meet the evolving needs and complexities of the securities industry.