John E Deaton, a well-known lawyer representing XRP holders and a vocal critic of Jay Clayton’s tenure as the SEC Chairman, recently took to Twitter to draw attention to what he believes are significant conflicts of interest surrounding the SEC’s enforcement action against Ripple, its CEO Brad Garlinghouse, and co-founder Chris Larsen.
Deaton’s tweet highlights the timing of the XRP case, which was filed on Clayton’s last day in charge at the SEC. Deaton immediately pointed out the potential conflicts of interest arising from Clayton’s decision to vote in favor of bringing an enforcement action against Ripple, Garlinghouse, and Larsen. This tweet comes after Brian Costello made a statement on Twitter, accusing the SEC of concealing financial misdeeds connected to Chinese executives.
Costello specifically mentioned Neil Shen from Sequoia, claiming that the SEC overlooked potential misdemeanors tied to Chinese business magnates under Clayton and current chairman Gary Gensler’s leadership. Costello criticized Gensler and Clayton for prioritizing personal interests over the nation’s defenses against fraud.
Peeling back the layers of professional entanglements, Deaton revealed potential biases arising from Clayton’s affiliations. He highlighted Clayton’s association with Patrick Berarducci of the Sullivan & Cromwell law firm, who had also served as Deputy GC at Consensys, a pivotal entity in the Ethereum ecosystem, and as Co-Chair of The Brooklyn Project. Deaton noted that other lawyers from Sullivan & Cromwell also went to work at Consensys, and the law firm played a role in the acquisition of JP Morgan’s Quorum and the JPMCoin by Consensys. These connections raise concerns of potential bias in enforcement decisions involving Ripple, considering the intense competition between XRP and ETH.
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Deaton further challenged Clayton’s actions, highlighting that Clayton had agreed he would be conflicted from voting against an enforcement action involving one of Sullivan & Cromwell’s clients. Paradoxically, Clayton voted for an action against Ripple, a formidable adversary of his law firm’s client.
Deaton didn’t stop at Clayton’s SEC affiliations. He also delved into Clayton’s affiliations post-SEC, emphasizing his association with entities like Apollo Group and One River, which have substantial stakes in cryptocurrencies. Deaton pointed out that Clayton joined One River after it made a $1 billion bet on BTC and ETH, the only two crypto assets given regulatory clarity by William Hinman’s speech.
Deaton didn’t shy away from questioning Hinman’s actions either. He emphasized Hinman’s documented strong ties to Ethereum’s Vitalik Buterin and Joseph Lubin before his famous speech, which has brought Hinman under scrutiny from the XRP community.
Expanding on potential collusion, Deaton indicated a meeting between Clayton and Gensler, his successor. He provocatively questioned the decision to file the case against Ripple on Clayton’s last day and leave it for the next administration to deal with, raising suspicions of a coordinated effort.
The lawsuit against Ripple has had significant consequences for the company, potentially setting it back years and giving Consensys and Ethereum major advantages. At present, XRP is trading at $0.5236.
In conclusion, John E Deaton’s Twitter statements shed light on what he believes to be glaring conflicts of interest surrounding the SEC’s enforcement actions against Ripple. He raises concerns about biases stemming from Clayton’s affiliations and relationships with entities involved in the crypto ecosystem. Deaton’s assertions invite scrutiny of the SEC’s decision-making process and highlight potential collusion and conflicts within the agency.
