John Deaton Criticizes Ex-SEC Official for Token Buyback Securities Claim

Recent statements by Armanda Fischer, a former Chief of Staff at the SEC, have sparked controversy regarding the classification of token buybacks. She suggested that such buybacks through decentralized autonomous organizations (DAOs), like Uniswap, could be treated as securities transactions. John Deaton, a notable crypto attorney, responded critically to Fischer's claims, arguing that they provide misleading interpretations of existing regulations.

Key Takeaways

Armanda Fischer, previously involved with the SEC, asserts that DAOs' token buybacks could qualify as securities transactions, referencing a 2017 SEC guidance.
Fischer's statements suggest that potential upcoming legislation may limit token dividends and buybacks from becoming standard practices.
John Deaton, a former U.S. Senate candidate and crypto lawyer, refuted Fischer’s claims, stressing that previous SEC guidance indicated most tokens are not securities.
Key examples of cryptocurrencies actively pursuing buybacks include Hyperliquid, Pumpfun, Aave, Lido, and Uniswap, which aim to enhance the value for token holders.
The current SEC's stance on crypto regulations is pivotal; only formal directives can definitively clarify the securities classification of token buybacks.

John Deaton criticizes ex-SEC official for token buybacks

Exploring Token Buybacks

The remarks from Fischer have revived discussions on the legal standing of token buybacks in the crypto market. She emphasized that legislation being considered by Congress alongside major crypto stakeholders would not facilitate token dividends or buybacks.

In contrast, John Deaton has challenged her assertions by highlighting that 57 enforcement actions followed the SEC's 2017 directive, but subsequent guidance in 2019 clarified that numerous tokens do not fit the securities definition.

Deaton further highlighted Fischer's previous advice to the SEC regarding Ripple Labs' lawsuit, noting that while XRP was subjected to legal scrutiny, it was eventually ruled as a non-security by Judge Analisa Torres. He criticized Fischer and other SEC members, suggesting they should accept their losses gracefully.

The Future of Token Buybacks

Looking ahead, all SEC enforcement actions regarding crypto under the Biden administration have been curtailed by reforms under the Trump administration. While only the secondary sale of XRP to institutional investors was labeled a securities transaction, the broader question remains: Are token buybacks classified as securities transactions, as Fischer claims?

Notable projects like Hyperliquid, Pumpfun, Aave, Lido, and Uniswap have actively engaged in token buybacks to increase value for their holders. The regulatory body has yet to provide formal guidance on whether such strategies qualify as securities transactions.

Hayden Adams, CEO of Uniswap, indicated that their decision to initiate buybacks stemmed from the current pro-crypto environment fostered by the SEC. Additional pushback came from other legal experts, such as Marvin Ammori, who questioned the clarity of Fischer’s legal interpretations, highlighting the SEC's track record of court losses.

John Deaton SEC

In conclusion, while the SEC’s approach to cryptocurrency has evolved since 2017, a definitive ruling on token buybacks will be vital in clarifying their classification as securities. As regulations and market dynamics continue to shift, the future for token buybacks remains uncertain.