John Deaton, a pro-crypto Republican candidate running for Senator Elizabeth Warren’s current senate seat, criticized SEC chair Gary Gensler over the new Coinbase appeal, accusing him of being a “bad faith regulator.” Deaton took to social media platform X to voice his concerns about the SEC’s regulation-by-enforcement approach, particularly in relation to whether digital assets qualify as investment contracts or securities. Deaton highlighted the inefficiency of Congress and accused Gensler of pursuing a political agenda, leading Coinbase to seek regulatory clarity through the judicial system by filing an interlocutory appeal in federal court.
Coinbase was originally sued by the SEC in June 2023 for allegedly operating as an unregistered crypto trading platform and violating U.S. securities laws. Despite the crypto exchange’s attempt to dismiss the case, U.S. District Judge Katherine Polk Failla denied Coinbase’s motion last month. Deaton criticized Gensler and the SEC for not protecting small investors and accused them of only serving their political masters. He emphasized the need for Coinbase and its lawyers to prioritize the interests of employees and shareholders, as well as giving a voice to customers who do not own shares in the company.
The SEC has come under fire from the digital asset community for its enforcement-focused approach to crypto regulation, with lawsuits being filed against major industry players such as Ripple and Binance. SEC Commissioner Hester Pierce criticized the agency for its treatment of the digital asset sector, arguing that its heavy-handed regulation was causing fear and driving people away. Pierce highlighted the Commission’s plans to ramp up its cyber-and crypto-enforcement unit, portray the crypto industry as lawless, and use cyber incidents as grounds for enforcement actions, contributing to the community’s concerns.
Reports indicated that the SEC and Coinbase were set to go to trial this spring regarding the litigation, but Coinbase filed an interlocutory appeal to the 2nd Circuit Court of Appeals. This move could potentially slow down the legal battle and prove to be a significant turning point in the case. Deaton continued to advocate for transparency and fairness in the regulatory process, reaffirming his commitment to being a voice for those impacted by the SEC’s actions. The ongoing conflict between the SEC and Coinbase underscores the challenges faced by the crypto industry in navigating regulatory uncertainty and ensuring a level playing field for all stakeholders involved.
