Pro-Ripple Lawyer Alleges SEC Threatened To Bankrupt A Crypto Business

With the legal battle between Ripple and the U.S. Securities and Exchange Commission (SEC) almost coming to an end, pro-Ripple lawyer John Deaton has accused the financial regulator of threatening to bankrupt a crypto business and said he has proof to back his allegation.

Deaton, the lawyer of XRP holders in the Ripple lawsuit, threw a major allegation at the SEC Wednesday. The lawyer claimed that the financial regulator first threatened to bankrupt the business of an American entrepreneur before filing a case even though it has nothing to do with misrepresentation or fraud.

“SEC threatened to bankrupt an American entrepreneur before filing enforcement action and then proceeded to do so after filing the case. In a case that did not involve fraud or misrepresentation,” he said in a Twitter thread.

Deaton also called out the U.S. Congress and said he’s willing to testify regarding the information he received on the matter and is prepared to provide evidence on how the SEC handles digital asset firms in the U.S.

Deaton used the case of LBRY, a blockchain-based file-sharing and payment network, as an example of how the financial regulator is deliberately bankrupting crypto firms.

The pro-Ripple lawyer also revealed that during a hearing on Nov. 21, 2022, Jeremy Kauffman, the CEO of LBRY, pleaded with the court to shed light on the rules set for companies building technology with a token so businesses could comply with the U.S. Securities law.

“There are so many smart people who want to be building and working in this field. Everyone in my company, whether we work at LBRY or not, wants to keep doing this work. And I thought for sure that by the end of this, we would at least know what the rules are,” Kauffman said at the time, as per Deaton’s tweet.

“LBRY is almost certainly dead. The SEC’s objective of bankrupting us through the process, which they threatened privately three years ago, they succeeded,” Kaufman added.

Deaton revealed that Kauffman even pleaded for clarity for users of the platform as well as clarity on secondary market transactions and told the judge that no one knows what the rules are.

“I just want to know what the rules are. Tens of thousands of other companies just want to know the rules. It’s okay if we lose. What I would like to come out of this is at least some knowledge of what the rules are,” Kauffman said, according to Deaton.