Deaton Reacts as Court Threatens to Sanction SEC For Lying

Popular legal expert John Deaton sheds light on how courts have continued to call out the Securities and Exchange Commission for lying. 

XRP holders’ attorney John Deaton has taken to the X platform to react to a federal judge threatening to sanction the SEC’s lawyers involved in the case against crypto project Debt Box. 

Court Threatens Sanction Against SEC Lawyers

On November 30, Judge Robert Shelby warned SEC lawyers in the Debt Box lawsuit that he may sanction them for convincing a court to freeze the company’s assets under false and misleading pretenses. 

In an attempt to secure a temporary restraining order, the SEC claimed that Debt Box was closing its accounts and moving its funds out of the United States. 

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However, the SEC refused to mention that Debt Box’s accounts were being closed by banks. The regulator also failed to note that the funds were moved to a credit union and not out of the United States. Following the SEC’s claim, a federal court froze the company’s bank accounts in August. 

With Debt Box proving that the SEC lied to obtain the temporary restraining order, the judge dissolved the order. 

Commenting on the development, Judge Shelby pointed out that the SEC’s misrepresentation caused Debt Box irreparable harm and undermined the integrity of the case’s proceedings. Hence, the court threatened to sanction the SEC’s lawyers in the case. 

Courts Call Out SEC For Lying  

Reacting, Attorney Deaton said the SEC has been called out for lying by every court that has dealt with it in the past three years. Per Deaton, anyone surprised that a federal judge threatened to sanction the SEC for lying has not been attentive in the past three years. 

“Court orders SEC to show cause why it should not be sanctioned for making false and misleading representations to the Court.” SEC v Debt Box, 11/30/23

ALMOST EVERY SINGLE COURT THAT HAS DEALT WITH THE @SECGov IN THE LAST 3 YEARS HAS CALLED THEM OUT FOR LYING. @PatrickMcHenry… https://t.co/bswgEaz3hB

— John E Deaton (@JohnEDeaton1) December 1, 2023

The lawyer representing thousands of XRP holders in the SEC v. Ripple lawsuit said the agency’s lawyers do not hesitate to mislead courts. 

Notably, Attorney Deaton drew attention to the subpoena Financial Service Committee (FSC) chair Rep. Patrick McHenry threatened to issue to SEC chair Gary Gensler for ignoring congressional requests. 

“I realize a subpoena has never been issued to the SEC. I realize you respect tradition and Congressional norms. But what more must happen before serving a subpoena?” he quizzed. 

Any person surprised a federal judge is considering sanctions against the SEC for lying to the Court, in a case involving crypto, has not been paying attention during the last 3 years.

It appears the Lawyers at the SEC have made it personal when it comes to crypto cases. SEC… https://t.co/1rjLjiTvF3

— John E Deaton (@JohnEDeaton1) December 2, 2023

Ripple CLO Cites 4 Cases Where Courts Rebuke SEC 

Notably, Attorney Deaton made this known while reacting to a recent tweet by Ripple Chief Legal Officer (CLO) Stuart Alderoty. 

In a tweet yesterday, Alderoty highlighted four scenarios where federal judges rebuked the SEC over its conduct in lawsuits against crypto firms. Per Alderoty, the judge in the Ripple case found that the SEC demonstrated hypocrisy by making inconsistent arguments. 

The Ripple CLO also noted that the judge overseeing Coinbase’s case against the SEC affirmed that the agency defaulted on its duty to respond in good faith to the exchange’s petition for crypto rulemaking. 

In the Grayscale lawsuit, the court found that the SEC’s inconsistent treatment of crypto exchange-traded funds, including spot and futures, is arbitrary and capricious. 

Lastly, Alderoty stated that a federal court has now ordered the SEC to show cause why it should not be sanctioned for its misrepresentation in the Debt Box lawsuit.