SEC Accused of ‘Poor Conduct’ by Pro-XRP Lawyer; Questions Raised on Meeting between FTX’s Sam Bankman-Fried and Gary Gensler

Cryptocurrency industry veteran John Deaton has shared his insights on the complex relationship between the industry and the U.S. Securities and Exchange Commission (SEC). In a recent statement, Deaton echoed the sentiments of Coinbase’s Paul Grewal, highlighting the unintended consequences of the SEC’s current strategy.

Deaton drew attention to the challenges faced by businesses seeking to comply with regulatory standards, particularly in terms of seeking legal advice on the lawful sale of tokens in the U.S. The SEC perceives such inquiries as potential intent to violate the Securities Act, creating a convoluted situation for companies.

Despite his concerns, Deaton clarified that he is not ranting against the SEC but rather stating facts. He criticized the confusion caused by the SEC’s approach, noting that when companies openly share information about their partnerships and token sales, the SEC uses this against them.

Commenting on the issue, Deaton said, “Asking a lawyer how one can sell a token lawfully in the U.S. is twisted, and the SEC argues that the advice was sought with the intent to violate the Securities Act.” This contradictory approach by the SEC, according to Deaton, discourages good conduct within the industry.

To emphasize his stance, Deaton highlighted specific cases within the industry. He referred to Brian Armstrong, CEO of Coinbase, who had previously been granted Acceleration approval for the public good. However, Armstrong’s attempts to meet with SEC Chair Gary Gensler went unanswered. In contrast, Sam Bankman Fried of FTX had the opportunity for private meetings with Gensler.

Deaton concluded by underscoring the adverse effects of the SEC’s approach. He stated that lawyers are advising clients and entrepreneurs not to cooperate with the SEC and to withhold transparency, at least for now. This runs contrary to the goal of protecting investors.

The complexities of the cryptocurrency industry’s relationship with the SEC continue to pose challenges for businesses seeking clarity and compliance. As the industry evolves, stakeholders like Deaton strive to shed light on these issues and advocate for a more balanced regulatory approach.