SEC’s Aggressive Stance on Cryptocurrency Caused $15 Billion in Losses, Claims John Deaton
Date: 2024-09-16 Author: Gabriel Deangelo Categories: CRYPTO PAYMENTS
John Deaton, a prominent cryptocurrency advocate and U.S. Senate candidate, has accused the U.S. Securities and Exchange Commission (SEC) of causing significant financial harm to small investors with its approach to regulating cryptocurrencies.
In a recent post on X, Deaton claimed that the SEC’s actions have caused retail investors losses exceeding $15 billion.
Deaton, who has represented thousands of XRP holders in lawsuits, claimed that the SEC’s enforcement practices are “excessive” and have significantly impacted small investors.
“The SEC’s abuses and gross overreach have caused small investors losses exceeding $15 billion. On behalf of the 75,000 small investors I represented, we do not accept the SEC’s apology,” Deaton wrote.
SEC Under Fire for Aggressive Regulatory Stance
His criticism comes as the SEC faces increasing scrutiny over its aggressive stance toward the cryptocurrency industry.
Deaton, who won the Republican nomination for the U.S. Senate in Massachusetts, is set to challenge Democratic Sen. Elizabeth Warren in the upcoming November election.
He emphasized his commitment to holding the SEC accountable, especially since he believes Sen. Warren has shown no willingness to do so.
The SEC’s criticism comes as the agency has made a surprising shift in its stance on cryptocurrencies.
In a court filing released by Coinbase General Counsel Paul Griwal, the SEC acknowledged that it no longer considers cryptocurrencies themselves to be securities.
“The SEC regrets the confusion it may have caused” by previously suggesting that the tokens themselves were securities, the amended complaint against Binance read.
This represents a departure from the SEC’s previous position, particularly regarding XRP, which has been classified as a security in previous litigation.
Deaton has long advocated for clarity in the SEC’s regulation of cryptocurrencies, arguing that the agency’s actions have often been inconsistent.
He noted the SEC’s failure to provide clear guidance on XRP, which has led to lengthy litigation.
“I was simply asking the SEC to follow the law and clearly state that the token (XRP) itself is NOT a security. Not only did the SEC’s lawyers refuse to do so, they attacked me personally,” Deaton added.
SEC Settles eToro
Meanwhile, the regulator recently settled a case with trading platform eToro, forcing it to stop trading nearly all crypto assets in the U.S. and levying a $1.5 million fine.
This is just one example of the SEC’s ramped-up enforcement efforts in 2024.
According to a Sept. 9 report from Social Capital Markets, the total monetary penalties levied by the SEC against crypto companies in 2024 reached $4.7 billion, up 3,000% from the previous year.
The SEC’s largest action came in June, when it reached a $4.47 billion settlement with Terraform Labs and its former CEO Do Kwon, marking the SEC’s most significant enforcement action against crypto to date.
Most recently, a coalition of seven U.S. states united to oppose the SEC’s regulation of cryptocurrencies.
Led by Iowa Attorney General Brenna Bird, the states filed an amicus brief arguing that the SEC's efforts to regulate cryptocurrencies constitute a "usurpation of power" that will stifle innovation, harm the crypto industry, and exceed the agency's authority.
