Deaton Accuses SEC of Using Ripple’s Transparency Against the Company And Its CEO

Prominent XRP advocate attorney John Deaton accuses the SEC of using Ripple’s quarterly report against the company and its CEO Brad Garlinghouse. 

In a tweet yesterday, CryptoLaw founder attorney John Deaton said the United States Securities and Exchange Commission (SEC) used Ripple’s quarterly report against the company and its CEO Brad Garlinghouse. 

According to Deaton, after Garlinghouse and Ripple implemented the cryptographic escrow for XRP, the company began publishing quarterly reports for the coin. 

Notably, the report highlighted the amount of XRP Ripple sold each quarter and how many coins the company bought from secondary markets. However, Deaton noted that the SEC used Ripple’s transparency against the company and Garlinghouse in its lawsuit. 

Lawyers Want Large Token Holders to Reveal Their Identities

Deaton made the comment while reacting to a tweet by Gabriel Shapiro, the General Counsel at Delphi Labs. Shapiro declared support for a particular aspect of the crypto know-your-customer (KYC) procedure. 

In the tweet, Shapiro concurred that large token holders need to reveal their identities and the percentage of the token’s total supply they directly or indirectly own and control. Per Shapiro, this concept is synonymous with the 13-D style, an approach used in traditional finance. 

Furthermore, the Delphi Labs’ General Counsel asserted that anything contrary to this KYC procedure could result in difficulty in evaluating system security and centralization. 

Reacting to the comment, attorney Deaton said he completely agrees with Shapiro as long as there is a sane regulatory environment. 

Once we’re in a sane regulatory environment, I 💯 agree. @bgarlinghouse & @Ripple implemented the cryptographic escrow and started publishing #XRP Reports every quarter, identifying #XRP sales. The SEC, however, used all of this “transparency” against Garlinghouse and Ripple.… https://t.co/NHQyMISMB0

— John E Deaton (@JohnEDeaton1) July 9, 2023

Hinman Claim Not to Remember ETH Coin Ownership 

Deaton recounted an incident where former SEC director William Hinman was asked if he and the commission investigated the token ownership of Ethereum founders before his infamous speech on June 14, 2018. 

Per Deaton, Hinman testified that the SEC uncovered the information during its due diligence process when evaluating ETH. However, Hinman said he could not recall the percentage of ownership regarding ETH. 

Recall that during Hinman’s infamous speech, the former SEC director declared Ethereum and Bitcoin as non-securities. According to Hinman, cryptocurrencies need to be sufficiently decentralized in order not to be deemed securities. By declaring ETH as non-security, Hinman also indicates that the coin is sufficiently decentralized.

Following the release of Hinman’s emails, pro-XRP lawyer Jeremy Hogan noted that Ripple was indirectly saying that an Ethereum official bribed the former SEC director to give the speech.