Pro-XRP Lawyer Expects SEC Rug Pull, What Does He Mean?

Pro-XRP lawyer John Deaton has shared his thoughts on whether or not the Securities and Exchange Commission (SEC) would approve a Spot Bitcoin ETF. He hinted at the regulator, most especially its Chair Gary Gensler, pulling a shocker on everyone who is anticipating an approval.

SEC And Gensler To Pull Off A Rug Pull?

In a post shared on his X (formerly Twitter) platform, Deaton quizzed about whether Gensler was about to pull off the greatest “regulatory rug pull of all time.” The lawyer put forward this question as he highlighted the amount of optimism in the market, as many expect the SEC to approve the pending Spot BTC ETF applications. 

Specifically, he alluded to the prediction of a 90% chance that these funds will get approved by January 10, 2024. Bloomberg analysts James Seyffart and Eric Balchunas made this prediction as they believe there is a high likelihood of the SEC approving a Spot Bitcoin ETF. January 10 happens to be the final deadline for a decision on ARK 21Shares Spot Bitcoin.

However, Deaton seems to believe that there is also the possibility (no matter how slim) that the the regulator could deny these applications. That would explain the “regulatory rug pull” he mentioned, as it is likely in reference to the SEC and Gensler doing the unexpected, especially considering their welcoming reception so far.

In recent weeks, the SEC seems to have been more open to the idea of approving these funds as far as there is regulatory compliance on the part of these filers. The Commission has met with several of them, including BlackRock, in a bid to hash out some of their concerns. This has been touted as a positive sign, as many believe the the regulator won’t go to such lengths if approval isn’t imminent. 

However, based on Deaton’s question, there is no doubt that the SEC and its Chair, Gensler, could still pull a fast one and move to deny these applications instead. 

How The Regulatory Rug Pull Could Happen

It is worth mentioning that Deaton’s post had come in response to another post made by former SEC attorney John Reed Stark. In that post, Stark had hinted at two possible scenarios on how the regulator could go on to deny the pending Spot BTC ETF applications.  

He suggested that the SEC’s welcoming reception could simply be a “CYA effort,” so it could state that the reason for denial was due to the filers’ failure to meet regulatory requirements. The second scenario was about the Commission denying these applications on the grounds that approval could pose a serious threat to investors.