Attorney Deaton says crypto businesses require banking for on and off-ramps.
Pro-XRP lawyer John E. Deaton has taken to Twitter to explain why he considers Custodia Bank’s lawsuit to be the most important legal battle in the crypto industry.
Custodia Bank Wins Big Against Fed
Custodia Bank, a crypto-friendly bank, recorded a significant win yesterday in its legal battle against the Federal Reserve. According to reports, a Wyoming federal judge denied the Fed’s motion to dismiss the lawsuit filed by Custodia Bank.
The crypto-friendly bank sued the Federal Reserve of Kansas in June 2022, claiming an unlawful delay in creating its master account. Instead of processing Custodia Bank’s application for a master account, the Fed filed a motion to dismiss the lawsuit. Interestingly, a Wyoming federal judge denied the Fed’s motion to dismiss the case.
Deaton Reacts
Commenting on the development, attorney Deaton said the lawsuit may be the most important case out there today.
However, many asked why Deaton described the Custodia Bank lawsuit as “the most important case out there” despite the existence of Ripple and Coinbase’s legal battles.
Responding to the inquiry, attorney Deaton noted that all legal battles involving crypto companies like Ripple and Coinbase are important. However, many crypto enthusiasts are unaware of the significance of Custodia Bank’s lawsuit.
Some people are surprised that I would say the Custodia case is arguably the most important case considering we have the @Ripple and @coinbase cases pending. They are all VERY important but most people are unaware of @CaitlinLong_ and Custodia’s situation. https://t.co/5RQTmYDKD4
— John E Deaton (@JohnEDeaton1) June 9, 2023
Crypto Businesses Need Banking
According to the pro-XRP lawyer, crypto companies require banking for on and off-ramps. Deaton noted that the crypto industry recently witnessed Chokepoint 2.0, which reportedly led to the collapse of Silicon Valley Bank (SVB) and Signature Bank.
The pro-XRP lawyer also mentioned regulators’ move to choke off crypto by ordering traditional financial institutions to stop offering financial services to crypto-related businesses.
Deaton stressed that Custodia Bank has a unique and revolutionary idea to end these stringent tactics aimed at suffocating crypto businesses. Custodia Bank seeks to achieve this goal by engaging in fractional banking and maintaining 100% of its reserves.
“When you have 100% reserves, a bank run becomes a non-issue because there would be no fear of not getting all your funds or assets out at any moment,” Deaton added.
He explained that the Federal Reserve did not like Custodia Bank’s revolutionary idea, which prompted the Fed to delay the bank’s application for its master account.
The Federal Reserve doesn’t like this revolutionary concept, however. The Fed, ignoring its statutory mandate, arbitrarily denied Custodia Bank a charter. Custodia sued the Fed and the Judge just denied the Fed’s motion to dismiss, allowing Custodia to go forward with discovery.
— John E Deaton (@JohnEDeaton1) June 9, 2023
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