Deaton Responds to Coinbase Legal officer, Calls XRP and Ripple Regulatory Sacrifices

Deaton Reacts to Coinbase’s Legal Officer’s Comment.

Attorney Deaton backs Coinbase’s Chief Legal Officer, who claimed that SEC’s legal tussle against the exchange is an attack against all of crypto.

In a recent tweet, attorney John Deaton said Coinbase’s Chief Legal Officer Paul Grewal is right to assert that the recent Wells notice received by the exchange from the SEC is a shot against the entire crypto industry and not just Coinbase alone.

Notably, Grewal commented on a recent Unchained Crypto podcast hosted by Laura Shin. Grewal noted that if the SEC could come after Coinbase despite being a publicly-traded company, then nobody is safe in the crypto space.

“[…] This is not just a fight for Coinbase. This is a fight for all of the crypto [because] if responsible actors with serious AML and KYC programs, publicly listed that are filing petitions for rulemaking and attempting to engage with the government can be treated in this fashion, nobody else is safe either,“ Grewal was quoted as saying.

The podcast prompted a series of reactions from members of the XRP community who believe Grewal’s assertion is a little too late. 

Deaton’s Reaction

Attorney Deaton noted that while many XRP holders believe that Grewal’s comment is two years late after it delisted XRP, he still believes Grewal is on track to claim that the Wells notice is a shot at crypto.

I know some #XRPHolders have commented over @iampaulgrewal’s statement to @laurashin that @SECGov 🆚 @coinbase isn’t Coinbase’s fight alone, but all of Crypto’s. Some believe Coinbase’s comment is 2 years too late after delisting #XRP. But regardless of the timing, Paul is 💯 https://t.co/9I20Vvg1vX

— John E Deaton (@JohnEDeaton1) March 26, 2023

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Deaton said XRP and Ripple were seen as a regulatory sacrificial lamb. He further said the San Francisco-based cryptocurrency exchange promoted XRP use in cross-border settlements and presented a report to the SEC in January 2019 stating that the cryptocurrency was not a security. Coinbase listed the coin in February 2019.

IMO, @Ripple and #XRP were viewed as regulatory sacrificial lambs. Coinbase promoted the hell out of #XRP’s utility (with #USDC’s) for moving money internationally👇and gave a presentation to the SEC in January 2019 that #XRP was NOT a security; then listed #XRP in February 2019. pic.twitter.com/iRWqb4SHNt

— John E Deaton (@JohnEDeaton1) March 26, 2023

The CryptoLaw founder said Coinbase would never have listed XRP if the SEC had suggested that the coin was a security because it needed the regulator’s approval to go public. 

“I know how XRP Holders feel about the delisting. At the time, I publicly disagreed with Coinbase for delisting it, but the sad reality is delisting XRP was probably not a very difficult choice for Coinbase to make considering it sought approval for an IPO and wanted harmony with SEC,” attorney Deaton added.

Response to Deaton’s tweets

Reacting to Deaton’s tweets, Bill Morgan, a pro-XRP lawyer, said he understands why Coinbase delisted XRP. Still, the cryptocurrency exchange did not support Ripple during the company’s legal battle with the SEC.

According to Morgan, Coinbase would have backed its initial decision that XRP was not a security. However, Morgan said the company chose not to destroy its relationship with the SEC because of its plans to go public.  

“But then, after Coinbase was listed, it still did not publicly affirm the correctness of its original decision to list XRP based on its understanding it was not a security. Again self-interest because it was trying to deal with the SEC,” he added. 

Morgan said it was after the crypto exchange received a Wells notice from the SEC, Grewal is now claiming “it was shot against all of crypto.” He added that Ripple and LBRY lawsuits were both shots at crypto, adding that the exchange’s hypocrisy needs to be called out.

It is noteworthy that not all XRP community members are furious with Coinbase. Recall that shortly after Coinbase received a Wells notice from the SEC, Ripple’s Chief Legal Officer Stuart Alderoty tweeted an ancient proverbial expression: “the enemy of my enemy is my friend.”

Despite Morgan’s claims that Coinbase did not support Ripple in its fight against the SEC, it is noteworthy that the crypto exchange filed an amicus brief supporting Ripple.  

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