A famous lawyer who supports crypto and is running for the Senate, John Deaton, has said that the U.S. Securities and Exchange Commission (SEC) is hurting small investors’ finances by being too strict with crypto regulations. Deaton says that small owners have lost more than $15 billion because the SEC is too involved.
Deaton, who is known for fighting for XRP and crypto rights, shared his worries on September 13 and said that the SEC’s wrongdoing and overreach were directly to blame for these huge losses. “Small investors lost more than $15 billion because of what the SEC did.” “On behalf of the 75,000 investors I work for, we do not accept their apology,” Deaton wrote. Adding that he was going to hold the SEC responsible, he said that his political rival, Senator Elizabeth Warren, had not done so.
A race for the Senate where crypto is a big deal
On January 1, 2021, I filed a Writ of Mandamus against the @SECGov stating that the SEC had violated 75 years of legal precedent by claiming the token itself was a security.
— John E Deaton (@JohnEDeaton1) September 13, 2024
I pointed out that orange 🍊 groves, condos, chinchillas, digital assets, and even beavers 🦫, had been… https://t.co/N4EVLkNiaR
The last time Deaton spoke was only two weeks ago, when he got the Republican nomination for the U.S. Senate in Massachusetts. Deaton is running against Democratic Senator Elizabeth Warren in November, and he has made crypto control a big part of his campaign. His criticism of the SEC is that it is too strict, which he thinks hurts new ideas and regular investors instead of protecting them.
The SEC’s Changing Views on Cryptocurrencies
An important change is that the SEC recently admitted in court that cryptocurrencies are not stocks. This change comes after taking the opposite stance for years. The SEC’s explanation, which was shared by Paul Grewal, Coinbase’s chief legal officer, in a post on September 13, suggests that the government agency might be changing its mind.
In its new lawsuit against Binance, the SEC said, “The SEC regrets any confusion caused by incorrectly categorizing tokens as securities.” While the SEC has said similar things in the past, this is a big change from what they have said, especially since they have called XRP a security, which Deaton has been against.
"The SEC regrets any confusion it may have invited" by falsely and repeatedly stating that tokens themselves are securities. This is the remarkable representation in Footnote 6 of @SECGov's Amended Complaint against Binance. I hope @s_alderoty is getting some good sleep tonight.… pic.twitter.com/PpbprvkGxh
— paulgrewal.eth (@iampaulgrewal) September 13, 2024
The future of how crypto is regulated
Even with these changes, the SEC has kept going after crypto companies. The commission reached a settlement with trade platform eToro on September 12. eToro was fined $1.5 million and had to stop almost all of its crypto activities in the United States. Along with record-high fines and penalties against crypto companies by the SEC in 2024, this is part of a bigger trend of stricter regulation.
As of September 10, the SEC had taken $4.7 billion in enforcement steps against crypto companies. This is 3,000% more than in 2023, which is a huge jump. This rise in enforcement was caused by the $4.47 billion deal with Terraform Labs and its former CEO, Do Kwon. It was the biggest enforcement case in SEC history.
A Look Ahead
Many people in the crypto world, including Deaton, still don’t like how the SEC does things, but the agency’s recent change in position may mean that the rules will change. The balance between new ideas and strict rules is still a controversial topic in the industry. The result of Deaton’s Senate race could have long-lasting effects on the future of cryptocurrency in the United States.
