- John Deaton accuses the SEC of neglecting its primary mission in digital asset oversight.
- Deaton questioned ex SEC Director’s testimony under oath, suggesting potential dishonesty.
- Deaton calls for regulatory reforms to prevent conflicts of interest and maintain transparency.
In a recent tweet, a well-known pro-crypto lawyer, John Deaton, criticized the U.S. Securities and Exchange Commission (SEC). He argued that the agency has lost its focus on its mission and appears to disregard the law.
According to Deaton, the former Director of Corporation Finance at the SEC, Bill Hinman, testified under oath that the agency does not need to satisfy all aspects of the Howey test to establish an offer or sale as an investment contract.
Meanwhile, Deaton raised concerns about the statement. He suggested that it leaves only two possibilities: Hinman was inadequately qualified for his position, or he knowingly lied under oath. Deaton also questioned whether it was plausible that someone who had led significant financial endeavors to be incompetent. He particularly cited Hinman leading the Alibaba IPO alongside his close associate Jay Clayton.
Furthermore, Deaton pointed to the SEC’s Framework for digital assets. He asserted that it was drafted and approved by Hinman, which notably ignored the common enterprise factor of the Howey test.
Also, Deaton raised concerns about potential conflicts of interest by addressing Hinman’s previous assertions that Bitcoin and Ethereum were not securities. He highlighted when Hinman’s law firm took the Bitcoin and Ethereum mining equipment company Canaan public. He said Hinman benefited from Canaan’s profits and received a substantial sum from a law firm associated with the Ethereum Enterprise Alliance (EEA).
Moreover, Deaton pointed out the network of relationships, where Hinman also partnered with the same group of investors who contributed to drafting his speech. Deaton criticized this situation as being highly problematic.
The lawyer expressed the need for a change in regulations. He suggested that the practice of regulators transitioning into roles within the industries they oversee should be addressed to prevent potential conflicts of interest. According to Deaton, issues will persist without such changes, regardless of who holds the presidency.
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