SEC crypto 'overreach' caused small investors to lose $15 billion: John Deaton
The SEC’s excessive intervention in the crypto industry has cost retail investors more than $15 billion, according to a prominent pro-crypto lawyer and Senate candidate.
The prominent pro-cryptocurrency lawyer and Senate candidate said the U.S. Securities and Exchange Commission’s (SEC) overreach in the cryptocurrency industry has caused retail investors to lose more than $15 billion.
The U.S. securities regulator is often criticized for its heavy-handed regulatory regime for the cryptocurrency industry.
According to Republican Senate candidate and attorney John Deaton, the SEC should be held accountable for its actions because its "gross overreach" caused investors to lose $15 billion.
The pro-XRP lawyer wrote in a Sept. 13 tweet:
"The SEC's misconduct and egregious overreach cost small investors more than $15 billion. On behalf of the 75,000 small investors I represent, we do not accept the SEC's apology."
Source: John E. Deaton
Deaton added that he intends to hold the SEC accountable for its regulatory actions because Sen. Elizabeth Warren "won't do it."
Deaton’s statement comes two weeks after he won the Massachusetts Senate nomination in the primary, setting up a November showdown between the pro-XRP attorney and Democratic Senator Elizabeth Warren.
SEC no longer considers cryptocurrencies securities: court filing
In a major shift, the SEC appears to be backing away from its previous stance that cryptocurrencies are securities.
According to court documents shared by Coinbase Chief Legal Officer Paul Grewal in a Sept. 13 tweet, the SEC clarified that cryptocurrencies themselves are not considered securities.
The SEC wrote in its amended complaint against Binance:
"The SEC regrets any confusion this may have caused"
Because it falsely claimed on multiple occasions that the tokens themselves were securities.
SEC court filing. Source: Paul Grewal
Industry participants viewed the statement as an ironic turn of events, as the SEC had previously maintained that XRP tokens were securities, something Deaton also highlighted:
“All I asked for was for the SEC to follow the law and make it clear that the token itself (XRP) is not a security. Not only did the SEC lawyers refuse to do that, they attacked me personally.”
On September 12, the SEC reached a settlement with eToro, forcing the trading platform’s U.S. division to cease trading in nearly all crypto assets and pay a $1.5 million fine.
SEC Crypto Enforcement Grows Over 3,000% Since 2023
The U.S. SEC is having a record-breaking year for crypto enforcement, even before the eToro settlement.
As of September 10, the SEC’s enforcement actions against crypto companies and their executives have totaled nearly $4.7 billion, an increase of more than 3,000% from 2023.
The total amount of enforcement won by the SEC in 2024 exceeds the total amount won from 2013 to 2023. Source: Social Capital Markets
The SEC’s record-breaking year was driven primarily by its $4.47 billion settlement with Terraform Labs and its former CEO Do Kwon in June, its “largest enforcement action to date,” according to a Sept. 9 report from Social Capital Markets.
Despite 19 fewer actions against crypto companies, the SEC’s total fines in 2024 increased 30.18 times, from $150.3 million in 2023 to $4.7 billion in 11 enforcement actions.
