Deaton emphasizes that a letter from former chairman Joseph Grundfest warned the SEC before it sued Ripple that “simply initiating the action will impose substantial harm on innocent holders of XRP, regardless of the ultimate resolution.”

“I am aware of no instance in which the simple announcement of a Commission enforcement proceeding has, absent allegations of fraud, misrepresentation, or omission, caused multi-billion-dollar losses to innocent third parties,” Grundfest wrote to all five commissioners. “Upon learning of the proceeding, intermediaries will cease transacting in XRP because of the associated legal risk. The resulting reduction in liquidity will cause XRP’s value to decline.”

Clayton ignored Grundfest’s warning, filed the lawsuit and jumped ship, leaving the SEC in growing legal and ethical jeopardy. Gensler, meanwhile, is increasingly hinting that the Ripple case is just the opening shot in a war he intends to wage on the whole space.