Crypto Lawyer Accuses SEC Attorneys of Hypocrisy and Disregard for Justice

Published January 8, 2024 1:17 PM

By Teuta Franjkovic

John Deaton called the SEC lawyers hypocrites | Credit: Bill Clark/CQ-Roll Call, Inc via Getty Images

Key Takeaways

John Deaton criticizes SEC and DOJ lawyers for not adhering to their justice-upholding duties.
He points out the SEC’s alleged hypocrisy and inconsistency in legal arguments across various cases such as Ripple’s.
He advocates for significant changes within the SEC, suggesting dismissals and accountability for key figures.

John Deaton, a lawyer known for advocating for cryptocurrency investors, has once again made headlines.

After offering to testify at a congressional hearing on digital assets, Deaton has now directed his attention towards criticizing lawyers at the United States Securities and Exchange Commission (SEC).

The Essence of Federal Prosecution

Deaton, who is recognized for his role as amicus counsel representing over 75,000 XRP holders in the Ripple lawsuit, as well as his involvement in the LBRY.com case, has now called SEC Chairman Gary Gensler to be removed. He cites a ‘lack of faithful allegiance to the law’ as the basis for his call.

As a former federal prosecutor, I can tell you that U.S. Government Attorneys are truly supposed to wear the white hat. Simply by standing up and saying in open court, “I represent the United States” should send shivers down ones’s spine. When I used to say it, it was with pride… https://t.co/M48Q5Mk5Mr

— John E Deaton (@JohnEDeaton1) January 7, 2024

Deaton reflects on his time as a federal prosecutor “with pride and honor”. He asserts that government attorneys should embody the highest ethical standards.

In the legal system, defense attorneys, like those representing Ripple or Coinbase, should act in the interests of their clients. Deaton points out that this often leads to a conflict of interest regarding the representation of stakeholders, such as XRP holders in the Ripple case. He stresses that while this is standard practice for defense lawyers, federal prosecutors are held to a different standard.

Federal Prosecutors: Guardians of Justice and Law – NOT

Deaton argues that federal prosecutors, whether in civil or criminal cases, should be driven by the law and the notion of justice. Their competitiveness and desire to win should stem from a commitment to these principles. He shares a hypothetical scenario involving the DOJ’s prosecution of FTX founder Sam Bankman-Fried.

He wrote: “If I were one of the DOJ lawyers prosecuting SBF, I guarantee you I would’ve been competitive and made sure that the other side didn’t outwork me, and I would’ve wanted to win that case and put him in prison for decades. In fact, when the call from above came down to drop the campaign finance charges against him, I would’ve likely been fired because I would’ve refused to sign the dismissal, and I would go public with why and who dropped the case.”

Highlighting the recent criticisms from Coinbase’s Chief Legal Officer, Deaton criticizes the SEC for its alleged inconsistency and hypocrisy. He references Judge Netburn’s use of the term ‘hypocrisy’ to describe how SEC lawyers have contradicted their arguments in various cases. This behavior, Deaton argues, demonstrates a departure from the allegiance to the law. It also, he claimed, focuses on winning arguments over serving justice.

“Further evidence of bad faith and lack of professionalism.”

Where have we heard similar remarks?

Judge Netburn said the SEC engages in hypocrisy and the agency’s lawyers “lack a faithful allegiance to the law.”

Almost sounds like a mean tweet by me but that was from the judge https://t.co/g4D9tdtyXT

— John E Deaton (@JohnEDeaton1) September 9, 2022

Judicial Observations and Criticisms

Deaton says federal district and appellate court judges echo his concerns. He cites examples from various cases, including Ripple, Grayscale, and the Voyager bankruptcy, where judges have observed similar patterns of behavior from SEC lawyers.

Concluding his argument, Deaton calls for significant changes within the SEC. He suggests that people, including SEC Enforcement Director Jorge Tenreiro, should be held accountable for failing to uphold the principles of justice and integrity. He advocates for the dismissal of those who have strayed from these core values, emphasizing the need for reform to restore honor and integrity in representing the United States.

The SEC did not immediately respond to a request for comment.

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About the Author

Teuta Franjkovic

Teuta is a seasoned writer and editor with more than 15 years of experience. She has expertise in covering macroeconomics and technology as well as the cryptocurrency and blockchain industries. She has worked for several publications as a journalist and editor, including Forbes, Bloomberg, CoinTelegraph, Coin Rivet, CoinSpeaker, VRWorld and Arcane Bear. Teuta began her professional career in 2005, working as a lifestyle writer at Cosmopolitan in Croatia. From there, she branched out to several other publications, covering mainly business and the economy. She then turned her attention to the world of cryptocurrency and blockchain, believing that crypto is among the most important inventions in the history of humanity. Her involvement in fintech began in 2014 and she has since lent her expertise in writing, editing and gathering information about the world of crypto, blockchain, NFTs and Web3. An all-round news hound, mentor, editor, and writer, Teuta enjoys teamwork and good communication. She holds a WSET2 diploma and has a thing for chablis, punkrock music and shoes. She also holds a double MA in Political science and Entrepreneurship.

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