Prominent cryptocurrency litigation specialist and vocal XRP advocate, John Deaton, has castigated the U.S. Securities and Exchange Commission (SEC), asserting that its actions have significantly impeded XRP’s potential for widespread adoption over the past three years.
While highlighting the recent integration of USDC into Coinbase’s financial ecosystem, Deaton underscores Coinbase’s proactive engagement with SEC attorneys in January 2019, ahead of the listing of XRP on their platform in February that same year.
In a recent post, Deaton suggests that, had it not been for the legal challenges stemming from the SEC lawsuit, Coinbase might have opted to acquire a stake in Ripple instead of Circle.
The year 2018 saw Coinbase list both XRP and Circle’s USDC, boasting transaction speeds of 3-5 seconds and 10-12 seconds, respectively.
Deaton’s critique of the SEC gains fresh relevance in light of Coinbase’s latest move to acquire a stake in Circle, heralding the launch of Circle’s USDC stablecoin on six new blockchains.
Though the press release lacks specifics on the blockchains or the stake’s value, a prior communication from Circle hints at the adoption of Polkadot, Cosmos, Near, and Optimism by the close of 2023.
Furthermore, Deaton emphasizes that it took MoneyGram six months after Coinbase’s listing to start using XRP for cross-border payments.
Delving Into Coinbase’s Due Diligence in 2019 Before Listing XRP
It becomes evident that the exchange meticulously approached its interaction with the SEC, engaging in a thorough discourse regarding XRP’s nature as a digital asset rather than a security.
During this engagement, Coinbase explicitly communicated its intention to list XRP, provided it was deemed compliant by the SEC.
According to Deaton, Coinbase diligently fulfilled its responsibilities as a conscientious entity, driven by the desire to sidestep conflicts with the SEC, given its aspirations for an impending IPO.
Significantly, SEC representatives did not voice objections to XRP during their consultations with Coinbase.
Deaton underscores that this non-disapproval from the SEC was rational, considering that half a year prior, the commission had subjected XRP to a comprehensive assessment based on the Howey test, ultimately determining that XRP did not fall under the security category.
Crucially, had XRP not passed the rigorous criteria of the Howey Test, the SEC would have advised cessation of activities. Nonetheless, Coinbase listed XRP without impediments on February 25, 2019.
In the ensuing months, Deaton notes that Coinbase vigorously promoted both XRP and the stablecoin USDC, which had been listed the previous year, presenting them as transformative solutions at a time when traditional bank transfers could take days.
In an unexpected twist, despite the SEC’s prior stance that XRP wasn’t a security, the former SEC chairman Jay Clayton filed a lawsuit against Ripple, asserting that XRP tokens constituted illicit securities.
This came in spite of the SEC granting MoneyGram International Inc the green light to incorporate XRP into its cross-border payment system 18 months prior to the lawsuit, as shown below:
Deaton contends that the missed potential benefits resulting from XRP’s legal entanglements cannot be underestimated.