John Deaton, a pro-Ripple lawyer representing thousands of XRP holders, believes the United States Securities and Exchange Commission (SEC) strategically capitalized on Ripple’s commitment to transparency and used it to target the company and its CEO, Brad Garlinghouse.
The attorney shared his thoughts in response to a Twitter post by Delphi Labs’ general counsel Gabriel Shapiro about the use of Know Your Customer (KYC) systems in the crypto space.
KYC for Large Crypto Holders
According to Shapiro, large holders should be required to identify themselves and what percentage of the total supply of a project’s token they directly or indirectly possess or control, similar to the transparency requirements of 13D filings.
one of the few crypto KYC-ish things I agree with is the idea that very large token holders should have to identify themselves and what % of total supply they directly/indirectly own/control, like 13D-style
otherwise difficult to truly assess system security/centralization…
— _gabrielShapir0 (@lex_node) July 9, 2023
Deaton agreed with Shapiro, noting that such would only be possible in a sane regulatory environment. The XRP lawyer then blasted the SEC, highlighting how Ripple and Garlinghouse went above and beyond by implementing a cryptographic escrow and publishing quarterly XRP reports, which meticulously detailed all sales.
Deaton: SEC Leveraged Ripple’s Transparency
Despite Ripple’s and Garlinghouse’s efforts to uphold transparency, the SEC turned the tables, leveraging its commitment and openness to target and undermine both the company and its CEO, according to Deaton.
The lawyer also recalled the 2018 speech given by William Hinman, the former SEC Director of Corporation Finance, on whether ether (ETH) qualifies as securities. Deaton pointed out that Hinman acknowledged that the agency was aware of the number of tokens owned by Ethereum’s founding members but couldn’t recall the exact percentage at the time of the speech.
Once we’re in a sane regulatory environment, I
agree. @bgarlinghouse & @Ripple implemented the cryptographic escrow and started publishing #XRP Reports every quarter, identifying #XRP sales. The SEC, however, used all of this “transparency” against Garlinghouse and Ripple.… https://t.co/NHQyMISMB0
— John E Deaton (@JohnEDeaton1) July 9, 2023
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