Why the SEC Appears to Favour Ethereum? Unveiling the Reasons
The post Why the SEC Appears to Favour Ethereum? Unveiling the Reasons appeared first on Coinpedia Fintech News
John Deaton, renowned cryptocurrency lawyer and founder of Crypto Law US, has raised critical questions concerning the US Securities and Exchange Commission’s (SEC) handling of ripple ripple m***h@ripple.com Crypto / Blockchain SolutionPayment solution and ethereum ethereum Blockchain NetworkTechnology . Deaton’s lengthy Twitter exposé suggests potential favoritism towards ConsenSys, a blockchain software company closely linked with Ethereum, and highlights the potential conflict of interest within the SEC.
Special Access to Regulators
Deaton notes that ConsenSys founder, Joseph Lubin, cleverly hired Sullivan & Cromwell (S&C), the former law firm of ex-SEC Chairman Jay Clayton, after Clayton’s appointment. This allowed Lubin and ConsenSys unprecedented access to the SEC’s upper echelons, Deaton implies.
The attorney also scrutinizes the meetings between Bill Hinman, former Director of the SEC’s Division of Corporate Finance, and ConsenSys, implying that Hinman might have been directed by Clayton to initiate these discussions.
Deaton presents evidence suggesting that Hinman’s speech in June 2018, which gave Ethereum a “regulatory free pass”, followed the recommendations outlined in a memo from the law firm Perkins Coie. The Perkins Coie memo lobbied for Ethereum’s non-security status and was endorsed by Andreessen Horowitz (a16z), a venture fund where Hinman later became a partner.
Quorum Acquisition and Ripple Lawsuit
ConsenSys’s acquisition of Quorum from JP Morgan, a deal brokered by S&C, brought additional controversy. Deaton suggests that the move supported JP Morgan’s Quorum-backed JPM Coin, a direct competitor to Ripple and its cryptocurrency, XRP.
Interestingly, the SEC filed a lawsuit against Ripple and XRP just four months after the Quorum acquisition. One River, a crypto-asset fund, also placed a $1 billion bet on Bitcoin and Ethereum two months before the lawsuit.
SEC’s Alleged Favouritism and Ripple Lawsuit
Deaton argues that Clayton, despite agreeing to recuse himself from cases involving clients of his law firm, S&C, nonetheless voted to bring a case against Ripple, a direct competitor of ConsenSys.
He points out that both Clayton and the Director of Enforcement, Marc Berger, who helped draft the lawsuit against Ripple, found employment with organizations linked to Ethereum shortly after leaving the SEC.
Also Read – Ripple vs SEC: Is the Summary Judgment Approaching as July Draws Near?
The Ethereum Advantage
Joseph Lubin has publicly admitted to Ethereum’s regulatory advantage. He claimed that Bitcoin and Ethereum arrived before regulators began paying attention, which Deaton suggests contributed to the SEC’s decision to grant Ethereum a free pass.
However, Deaton juxtaposes Lubin’s self-congratulation with SEC Commissioner Hester Peirce’s criticism of the lack of regulatory clarity for cryptocurrencies, both in 2018 and today.
Conflict of Interest?
Deaton questions Hinman’s relationship with Lowell Ness, an attorney from Perkins Coie who played a significant role in advocating for Ethereum’s non-security status. Despite Ness sending Hinman a memo and a safe harbor document, Hinman claimed not to know Ness when questioned about their relationship.
Deaton concludes by urging the crypto community to question the SEC’s motives in the Ripple case, pointing to a potential conflict of interest involving the SEC’s handling of Ripple and Ethereum.
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