Lawyer John Deaton is beginning a class action lawsuit to fight allegations Ethereum is a security.
The Managing Partner of the Deaton Law Firm posted a link to a Google Docs form for concerned investors to sign up.
Ethereum investors feel the heat
On March 9, New York Attorney General Letitia James filed a lawsuit against KuCoin, alleging the exchange has been operating illegally in her state, including the offering of unregistered securities.
James directly called out Ethereum, LUNA, and TerraUSD as securities, thus pushing for the court system to determine their securities status.
In June 2018, former SEC Director William Hinman gave a speech in which he gave his opinion that Bitcoin and Ethereum are not securities. The market interpreted this to mean the SEC had greenlit the two largest cryptocurrencies.
“based on my understanding of the present state of Ether, the Ethereum network and its decentralized structure, current offers and sales of Ether are not securities transactions.”
However, in the ongoing SEC vs. Ripple lawsuit, doubt was cast on Ethereum not being a security. The fair notice defense maintains that the XRP token is similar to Bitcoin and Ethereum, and without fair notice otherwise, they had no reason to believe they breached securities laws through the sale of XRP tokens.
Under questioning, Hinman said the speech was “intended to express my own personal views” and was not a reflection of agency policy, thus leaving the door open on Ethereum’s securities status.
It was discovered that Hinman had a conflict of interest via a former employer, Simpson Thacher, who is a member of the Ethereum Enterprise Alliance.
John Deaton weighs in
Deaton led a class action lawsuit against the SEC, alleging the agency’s enforcement action against Ripple had harmed XRP investors. Over 70,000 people joined the lawsuit.
Since enforcement began, Deaton has been an instrumental figure in bringing the SEC to task, including requesting intervention to represent the interest of XRP holders in court.
A degree of animosity formed between the XRP and Ethereum communities over the former’s perceived special treatment. A tweet from Ethereum co-founder Vitalik Buterin in December 2020 summed up this situation:
“Looks like the Ripple/XRP team is sinking to new levels of strangeness. They’re claiming that their shitcoin should not be called a security for *public policy reasons*, namely because Bitcoin and Ethereum are “Chinese-controlled”
However, with Ethereum now in the firing line, @thebearabebull called it “perfect karma.”
Commenting on the past animosity, Deaton framed the situation and his willingness to help the ETH community as operating in a united front against regulators.
He further clarified that this is about helping people, regardless of their crypto community affiliation.
“Sorry, but some people are missing the point. I don’t care about the “ETH folks” just like I don’t care about the “Ripple folks.”