Attorney John Deaton Accuses Gary Gensler’s SEC Of Gross Overreach In Its War On Crypto.
John Deaton calls out Gensler for trying to invalidate decades of securities law.
In a FOX Business opinion piece authored by Attorney John Deaton on Sunday, the lawyer calls out the US Securities and Exchange Commission (SEC) for stretching beyond its constitutional bounds in its war against crypto, accusing SEC chair Gary Gensler of invalidating decades of securities law and standards.
Notably, Deaton’s piece comes in response to statements by SEC chief Gary Gensler in a Wall Street Journal Opinion piece that there is no reason for the crypto markets to be treated differently.
The SEC’s Overreach
According to Deaton, barring congressional action, the primary regulator of the crypto market should be the Commodity Futures Trading Commission which oversees investments that can not be classified as traditional securities. However, Deaton accuses the SEC of taking advantage of the present lack of clear crypto rules from Congress to launch a campaign of regulation by enforcement.
The attorney says that the SEC is doing this by trying to stretch the Howey Test, a securities standard created by a Supreme Court ruling in 1946. Deaton disclosed that the Howey Test holds that an investment contract occurs “when a person; 1) invests money; 2) in a common enterprise; 3) and is led to expect profits; 4) solely from the efforts of the promoter or a third party.”
According to Deaton, the SEC goes beyond its bounds of regulating how investment contracts are sold to trying to regulate crypto tokens regardless of the purpose for which it was purchased. “As a legal theory, it should frighten everyone well beyond the crypto space,” Deaton writes.
“The most important thing to realize is that the SEC’s allegations are not limited to when or how Ripple or LBRY sold tokens. The SEC is asserting that both of these unique tokens are securities per se, no matter who sells them or why,”
Deaton writes, citing the two cases being pursued by the SEC. “Although securities laws govern investments, like the one in Howey, the SEC now claims it is immaterial as to why anyone acquired these tokens – even if the purchaser intends to use the token to access the technology for non-investment reasons.”
Deaton Says The SEC Has Lost Sight Of Its Primary Responsibilities
Meanwhile, Deaton asserts that the SEC has lost sight of its primary jurisdiction and responsibilities. According to the lawyer, there is a surge in meme stocks which are luring novice investors, and special acquisition companies (SPACs) are crashing. According to Deaton, these worrying trends should leave the SEC with little time to be poking its nose into the crypto market.
Deaton, in June, had previously called out the SEC for ignoring its primary responsibility to protect investors in its case against Ripple. He noted that the actual victims in the SEC’s legal battle with Ripple are XRP investors, many of whom had never heard of Ripple before the case.
Deaton currently represents 72,000 XRP holders in an amicus curiae status in the SEC case against Ripple. Notably, the SEC has attempted to revoke Deaton’s amici status to no avail.
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Source: https://thecryptobasic.com/2022/08/22/ripple-xrp-holders-attorney-blasts-gary-genslers-wsj-op-ed-calls-out-the-sec-for-overreach/?utm_source=rss&utm_medium=rss&utm_campaign=ripple-xrp-holders-attorney-blasts-gary-genslers-wsj-op-ed-calls-out-the-sec-for-overreach