In response to a recent Bloomberg article titled “The SEC Comes for Crypto Custody,” John Deaton played back a striking statement made by Judge Sarah Netburn, the United States Magistrate in the Southern District Court of New York and the handler of the Ripple-SEC case.
In a comment made by Netburn in July 2022, the district judge criticized the SEC’s pretense in its regulatory actions in the crypto industry. According to her, the SEC is taking up numerous litigation actions to further its desired goal of regulation by enforcement and not out of faithful allegiance to the law.
Particularly, Judge Netburn called out the regulatory agency for hypocrisy, citing the inconsistencies in the Gary Gensler-led SEC’s viewpoints regarding the 2018 Hinman Speech Documents that were finally released to Ripple in late 2022 after 18 months and 6 court orders.
Both Matt Levine, a senior columnist at Bloomberg News, and John Deaton, the founder of Crypto Law and pro-XRP proponent are on the same page with Judge Sarah Netburn. As stated in his recent opinion piece, the prominent journalist stated that the SEC is capitalizing on legal provisions to subtly extend its regulatory powers in the nascent industry, leaving industry participants a step behind.
“The SEC is being ruthless and creative about expanding its powers, and the crypto industry seems to be playing catch-up,” he wrote.
Levine added that it is rather an unusual situation that the securities watchdog is launching attacks on several cryptocurrency companies. Lately, the SEC cracked down on a top U.S.-based exchange Kraken while threatening Paxos with a lawsuit over the Binance-branded stablecoin BUSD, issued by the company.
Reacting to Levine’s article, John Deaton, who is confident Ripple will win the SEC in the XRP lawsuit even if it gets to the Supreme Court, agreed with Judge Netburn’s comment.
He wrote:
“Let’s not forget what a federal judge recently said about the conduct and behavior of the lawyers at the SEC: The hypocrisy in arguing to the court, on the one hand, that the speech is not relevant to the market’s understanding of how or whether the SEC will regulate cryptocurrency and, on the other hand, that Hinman sought and obtained legal advice from SEC counsel in drafting his speech, suggests that the SEC is adopting its litigation positions to further its desired goal and not out of a faithful allegiance to the law.”
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