‘I’m a Pro-Freedom Candidate’: John Deaton on his Senate Race With Elizabeth Warren

If you’re looking for a “Pro-Crypto” vs. “Anti-Crypto” political showdown, good luck finding a juicier battle than the Massachusetts race for the U.S. Senate.

On Team Anti-Crypto, of course, is Senator Elizabeth Warren (D), who famously declared that she would build an “anti-crypto army.” Senator Warren has held her seat for over a decade. Especially in left-leaning Massachusetts, her reelection had seemed inevitable.

John Deaton is a speaker at this year’s Consensus festival, in Austin, Texas, May 29-31.

Enter attorney John Deaton, a newcomer to politics, who has a very different take on crypto. Deaton is a former U.S. Marine and looks the part — bald, goateed, muscular. And he knows the crypto space well. I first spoke with him last summer about his work on behalf of “XRP Army.” Deaton was baffled by the SEC’s four-year lawsuit against Ripple, calling it “the most over-broad, far-reaching, outrageous case I’ve ever read. It made no sense.” Deaton personally intervened (counter-suing the SEC) and was largely vindicated, as Ripple (mostly) won the blockbuster case last July and the SEC later dropped its own suit.

Deaton, who has received donations from Ripple CEO Brad Garlinghouse and Chris Larsen, the company’s co-founder and various members of the crypto community, insists he’s not an “XRP Attorney,” but was simply combating government overreach. And that fight against overreach seems to be his animating principle — with crypto a key part of the battle. Warren, for example, said she supports a government-issued central bank digital currency (CBDC). Deaton’s take? “If the government can control your money through a programmable CBDC — where they can turn it off or turn it on, or limit its geographic abilities — you’re talking about complete control over the individual’s life,” says Deaton. “They get to see where you spend your money, how you spend your money. It really would turn America into potentially a surveillance state.”

This is why Deaton calls himself the pro-freedom candidate. In perhaps a sneak preview of what he’ll share onstage at Consensus 2024, Deaton explains the crypto regulation he’d support if elected to the Senate, he articulates why he believes in crypto (even though he brushes off the label “pro crypto candidate”), and why if he was in charge of the Senate Banking Committee, he’d have “a lot of fun” asking questions of SEC Chair Gary Gensler.

Warren is still rated a “solid” bet for re-election (according to the Cook Report), but her race with Deaton is closely watched for whether “crypto” can move the needle on voting patterns this year.

Interview has been condensed and lightly edited for clarity.

What’s your pitch to the crypto/web3 space? Why should they want you to win?

John Deaton: I’m not a pro-crypto candidate, I’m a pro-freedom candidate. When I was on Anthony Scaramucci’s podcast, at the end of the interview, we did a word association — he would say a name or a word, and he wanted my immediate reaction. He said “Bitcoin.” And I said “freedom.”

Bitcoin is digital property. It’s a digital form of gold. At the end of the day, it’s about property rights. I don’t believe the government should be in the business of telling people what they can own and what they can’t own. That’s really why I got involved in the space.

Can you clarify why you got involved with Ripple?

A lot of people, early on, called me the “XRP Attorney” because I had sued the SEC and intervened in the Ripple case. The irony of that is I had very little investment in XRP. [My holdings in] Bitcoin [were] at least 10 times more. It really wasn’t about the underlying token. Obviously I’m not a [XRP] maximalist. I’m a freedom maximalist. It was about the government’s overreach.

Putting aside government overreach, what are your overall thoughts on blockchain tech?

Do I believe in digitalization? Do I believe that tokenization of real-world assets and the blockchain underlying technology is a way to revolutionize finance? Yes. I am a believer in the technology.

For example, we have a Department of Defense that hasn’t passed an audit in years. Like, they don’t know where billions of dollars are. Imagine if all of that was done on the ledger? And you have absolute, immutable proof of where every penny is spent. It would be there on the blockchain. So I think Web3 and the blockchain technology is here to stay.

If you’re elected to the Senate, what kind of crypto policy and regulation would you push for?

A lot of people think that crypto and stablecoins are a threat to the U.S. dollar. I disagree with that. I think they’re a way to reduce friction in the system, and improve efficiencies, and actually bolster the dollar’s dominance, if done the right way. So, stablecoin legislation that doesn’t affect the user, but making sure that AML and KYC and the rules are being applied to the issuers and their companies, I favor that.

And I favor regulation that makes it clear that if you give entrepreneurs real guidance, they can meet it. I think that regulatory clarity is the final step to really fulfilling this innovation and seeing it grow. To make it clear what constitutes a security. And then you could classify them [cryptocurrencies] sort of like the United Kingdom did, where it says, “We have security tokens, we have utility tokens, we have exchange tokens,” and then there’s always a hybrid of one in between. Then you just lay out those guidelines, and make it clear. Then I think we’re going to see an explosion in the industry.

Your opponent, Senator Warren, has a very different take on crypto. Where do you most disagree with her?

In the first [Senate Banking Committee] hearing with Gary Gensler, she gave him the questions she was going to ask, and as well as the suggested answers. That’s not how you conduct oversight. Her job is to hold Gary Gensler accountable, asking tough questions. And FOIA requests showed that she orchestrated that testimony. So, to me, that disqualifies her right then and there.

At yesterday’s hearing, she was asking the deputy treasurer questions about if a validator is in Iran, somehow that means Iran is making millions of dollars. Now, you and I and everybody reading this knows that a validator could be anywhere. It could be in Iran, it could be anywhere else in the world. That’s what’s a decentralized distributed ledger system is. But a validator doesn’t get cash. If anything, a validator could get paid in the native asset of the network, whether it’s Bitcoin or Ethereum, but then you have to have an off-ramp. And the off-ramps and on-ramps are the exchanges, and they already comply with AML/KYC.

So, for her to say that these validating nodes have to comply with KYC/AML, that’s an impossible feat. And she’s a smart woman, right? So there’s only two things with Elizabeth Warren. One, she either has a fundamental misunderstanding of the technology, or she’s intentionally misleading the American people. I think she’s a bright person, so I think it’s the latter.

Can you explain?

She went on Chuck Todd’s “Meet the Press,” and stated that America is ready for a central bank digital currency issued by the Federal Reserve. I think that’s what her motivation is. When you think about it, why is the senator from Massachusetts so focused on crypto? Just think about that. We have illegal immigration, a debt crisis, with the government $34 trillion in debt. Personal credit cards are over a trillion dollars. We have an opioid crisis in the country, which is related to the southern border. We have all these foreign wars going on. And on her first announcement of her reelection, she says she’s going after crypto. And that made me scratch my head, and think, “why?”

We have all of these real emergencies, why are you focused on crypto? And then she went and said that she favors the Federal Reserve’s central bank digital currency, which I view as one of the biggest threats to freedom of my lifetime. Because if the government can control your money through a programmable CBDC — where they can turn it off or turn it on, or limit its geographic abilities — you’re talking about complete control over the individual’s life.

They get to see where you spend your money, how you spend your money. It really would turn America into potentially a surveillance state. And that’s extremely dangerous. So I think she’s getting it wrong on multiple levels, but I also believe there’s an agenda here. Her anti-crypto bill was written by the bankers. Right? This is a proven fact, not opinion. The Banking Institute Policy wrote her anti-crypto bill. We know that for a fact. The chairman of the Banking Institute Policy of the United States is Jamie Dimon, of JPMorgan Chase, the man who says, from the beginning, that Bitcoin is a fraud, and testified for Senator Warren that the only use case for Bitcoin and crypto is terrorists and all that. And we all know that’s nonsense.

And the final thing that she gets wrong, and I think she knows that she’s wrong — is that she keeps saying that crypto and Bitcoin is only being used for terrorism and drug cartels and things of that nature. The truth is, it’s something like only 0.03% of crypto is being used [for illicit activities]. For example, we know $900,000 of crypto was used [for illicit activities], whereas HSBC [laundered] $900 million, through the banking system, for the Colombian and Mexican drug cartels. And so it’s almost a silly argument that she’s making. I’m sure ATM machines have been used in drug deals. We don’t ban ATM machines.

You mentioned Gary Gensler earlier. Let’s say you were in this Senate Banking Committee hearing. What are the questions you’d ask him?

The first thing I’d ask him is why he was having meetings with [FTX founder] Sam Bankman-Fried, who was running an offshore exchange, and denying meetings to someone like Brian Armstrong, of Coinbase, a publicly-traded company and the largest American exchange. I’d ask him who set those meetings up. Why was SBF given such access? Where are the notes? I want to see all of those notes.

At SBF’s trial, the testimony was that Sam Bankman-Fried donated $10 million to the Biden administration, to gain access. Why was he given such great access? That would be one of the first areas that I ask him. I’d spend a lot of time with Gary Gensler, and have a lot of fun with him.

Last question. Any predictions for the crypto space?

Well, I think the biggest thing is that people need to understand that crypto has a large voice. From what I’ve been told, before the ETFs, there were 52 million Americans who owned crypto. Then the ETFs came out. Now it could be as high as 70 to 80 million. You’re talking about probably one out of four adults who own bitcoin or crypto.

I’ve been saying that in this election, freedom is on the line. So they need to go out and vote for candidates who favor innovation and freedom. I believe that Bitcoin and crypto is here to stay. That doesn’t mean that 20,000 tokens are here to stay, you know what I mean? But it means that projects with utility are here to stay. And I think that Bitcoin has a bright future.