Did This Pro-XRP Lawyer’s Prediction Just Come True?

The SEC sets its sight on Coinbase’s asset listing.

In July, CryptoLaw founder and pro-XRP attorney John Deaton predicted that the United States Securities and Exchange Commission (SEC) would eventually sue a U.S.-based crypto exchange before the end of the year, naming Coinbase and Binance.US as potential targets.

It seemed likely that it would happen as just a day later, the SEC, in a complaint against former Coinbase employee Ishan Wahi alleged that nine assets traded on the crypto exchange were unregistered securities. In addition, the regulator launched investigations into the publicly traded exchange. 

However, the year came to an end, and nothing happened. Deaton stuck to his prediction carrying it over to 2023. It is a prediction that has come true in part with recent SEC enforcement actions against Gemini and Kraken. 

From July 20, 2022 on @FoxBusiness, @JohnEDeaton1 predicted what happened today. pic.twitter.com/GsxlKtxEAk

— CryptoLaw (@CryptoLawUS) January 12, 2023

But the attorney has maintained that the SEC would go after an exchange for offering unregistered securities for trading. Most recently, the attorney reiterated this view as he expressed confidence that the controversial Hinman documents would become publicly accessible, regardless of what happens in the Ripple case.

For context, the SEC enforcement actions against U.S.-based exchanges so far have revolved around yield and staking products and not around tokens offered by the exchanges, at least until yesterday.

As highlighted in a report today, the SEC has issued a Wells notice to Coinbase. The notice expressed the SEC’s belief that an unspecified portion of its listed assets, Coinbase Earn (its staking program), Coinbase Prime, and its non-custodial wallet violated investor protection laws.

So Has Deaton’s Prediction Come True?

Today’s report explains that a Wells notice informs a firm or individual of the SEC’s belief that the receiver has violated securities law. 

It allows the recipient to try to convince the commission otherwise. From the moment a Wells notice is issued, the SEC has a six-month window to decide whether or not to pursue enforcement action in court.

So while Deaton’s prediction has technically not come true yet, it seems more likely than ever as the SEC attempts to assert jurisdiction over the nascent market one enforcement action at a time.

The attorney described the SEC’s conduct as disgraceful, responding to the Wells notice and Coinbase’s response today.

When you read this coupled with the conduct of the @SECGov in the @Ripple case, must come to the conclusion that the SEC, as an institution, is a compete and utter disgrace.

I’m not surprised, considering 9 months ago I said the SEC would do this, but I am angered and saddened. https://t.co/hZOMew2I22

— John E Deaton (@JohnEDeaton1) March 22, 2023