John E. Deaton, a prominent legal expert and advocate for cryptocurrencies, has strongly criticized the US government for its recent substantial transfers of Bitcoin to the San Francisco-based crypto exchange Coinbase. Known for his outspoken views on crypto regulatory issues, Deaton has expressed concerns about the transparency and motives behind these transfers.

The US government's actions have come under fire following reports of transferring thousands of Bitcoins, valued at $241 million, to Coinbase. These funds were originally seized from Banmeet Singh, a convicted drug dealer, during a trial in January 2024. This transfer has drawn attention amidst a downturn in the global crypto market.

In response to these transactions, Deaton condemned the US government's use of Coinbase, despite ongoing legal disputes between the exchange and the US Securities and Exchange Commission (SEC), chaired by Gary Gensler. Deaton criticized Gensler for overseeing actions that indirectly support Coinbase, despite previously declaring the exchange's operations unlawful.

According to Deaton, such actions from the US government highlight inconsistencies in regulatory practices and raise doubts about the SEC's credibility. This criticism aligns with Coinbase's recent legal actions against the SEC and the Federal Deposit Insurance Corporation (FDIC), signaling escalating tensions over regulatory clarity in the cryptocurrency industry.

Coinbase's Chief Legal Officer, Paul Grewal, stated that the exchange has filed lawsuits under the Freedom of Information Act (FOIA) to obtain crucial documents related to Ethereum's regulatory status and FDIC's communications with financial institutions regarding crypto activities.