Deaton Throws In Weight Behind Coinbase in Ongoing Securities Lawsuit
CryptoLaw Founder and prominent Pro-XRP lawyer John Deaton threw weight behind Coinbase in his latest argument concerning the exchange's claims against the SEC.
In a tweet, Deaton asked if Paul Grewal, Coinbase's chief legal officer, exaggerated his statements that the SEC violates the law in its move against crypto firms.
Is @iampaulgrewal engaging in hyperbole by claiming the SEC is violating the law?
LET'S REVIEW A FEW FACTS:
1) up until 2018, the SEC had no policy whatsoever regarding SEC staff owning Crypto because these digital assets were a new asset class and the SEC was unsure about it; https://t.co/9UU4jzuoZl
- John E Deaton (@JohnEDeaton1) July 4, 2023
The lawyer highlighted compelling facts that support Coinbase's claims against the SEC. Deaton's remarks come as a reaction to Paul Grewal's assertion that the SEC is violating the law.
Deaton's argument progressed with a few facts review. Firstly, he said the SEC had no policy regarding staff owning crypto until 2018 because it was unsure of digital currencies since they were a relatively new asset class.
The lawyer dabbled into Hinman's 2018 speech on digital assets and the former SEC director's proclamation that Bitcoin and Ether were not securities. Deaton noted that, at the time, senior SEC officials acknowledged that digital assets fell into a regulatory gap. And it was unclear whether the SEC would even regulate the.
Thirdly, Deaton recalled that the 2019 Annual FSOC report, which Jerome Powell, CFTC chairman, Treasury Secretary, and others signed, highlighted Virtual Assets' growing market cap. He also noted that former SEC chairman, Jay Clayton, signed the same report without referencing US securities laws.
According to the attorney, these bureaucrats signed the 2019 FSOC report highlighting Bitcoin, Ethereum, Litecoin, and XRP's growing market cap, without referencing US securities law.
In addition, Gary Gensler, while testifying at his confirmation hearing, acknowledged the existence of a regulatory gap. Deaton noted that Gensler agreed that there was no existing regulatory framework for crypto companies as it falls outside the CFTC and SEC frameworks.
The SEC's Moves Are UnconstitutionalThe crypto advocate added that US lawmakers proposed a crypto assets legislation with who and how Congress wants to regulate the asset class. But the bill exempts crypto regulatory authority from the SEC's jurisdiction, with one proposing to fire the current SEC chief Gensler.
Moreover, Deaton cited an executive order signed by President Biden which appears more in the CFTC's favor to regulate crypto than the SEC's.
The CryptoLaw founder further argued that no case in US history found that an investment contract existed between a promoter or issuer and a buyer without prior privity, communication, or relationship between both parties.
Also, he noted that no preceding case in the US found the secondary sale of an asset that once served as the underlying asset in an investment contract as a security. Deaton stated that the only appellate case involving a secondary sale of an investment contract dismissed the securities claims.
The attorney ended his note by saying that Coinbase's legal officer Paul Grewal's statement claiming the SEC is violating the law is not an exaggeration. Deaton noted the SEC engages in an absurd unconstitutional expansion of the Howey test.
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