- The Ripple vs SEC legal battle takes a new turn after William H. Hinman’s document was unsealed.
- Ethereum co-founder Vitalik Buterin is suspected to have influenced Hinman.
The lawsuit filed by SEC against Ripple Labs in December 2020 is still ongoing but has taken a dramatic turn in the past few days. Throughout the legal battle, the release of former SEC Director William H. Hinman’s 2018 speech has been a bone of contention.
Several attempts by SEC to seal the document were unfruitful as Judge Analisa Torres instructed the Commission to make it available to the public. According to the judge, the document is not protected by deliberative process privilege.
On June 13, the internal document related to the speech was released .
What is Hinman’s Speech?
At the Yahoo Finance All Markets Summit: Crypto in 2018, the former SEC Director stated in his speech that cryptocurrency may no longer be a security as long as the network is fully decentralized. Interestingly, Bitcoin and Ethereum were mentioned as the assets that meet this criteria.
If the network on which the token or coin is to function is sufficiently decentralized – where purchasers would no longer reasonably expect a person or group to carry out essential managerial or entrepreneurial efforts – the assets may not represent an investment contract.
As far as the court case is concerned, this statement has shown to be a real problem for SEC. According to reports, the newly released document showing edits of the speech indicates that the editors were worried that the statement may undermine the argument that Ethereum is a security.
The edits to the document read:
Even with the caveats in the sentence, it seems that it would be difficult for the agency to take a different position on Ether in the future. Further, the rest of the paragraph strongly implies that the thinking applies to Ether.
Many Ripple advocates and known pro attorneys have stated on several occasions that the unsealing of the document could be very instrumental in the legal status of XRP. On June 12, Ripple Lab CEO Brad Garlinghouse stated that they have waited for over 18 months for this day, and he believes that “it was worth the wait.”
Some Ripple Enthusiasts Think Hinman Was Influenced
While commenting on the document, Ripple’s Chief Legal Officer, Stuart Alderoty, recalled some instances where the commission’s Head of Trading and Office of General Counsel ignored feedback. He observed that the commission overcomplicated the Howey test and was too far from the Howey standard. Alderoty strongly believes that an investigation must be conducted to understand what or who influenced Hinman.
The unsealed document has created divergent views on whether the speech represents Hinman’s opinion or the official stance of the SEC. One document disclosed that Ethereum co-founder Vitalik Buterin had a call with Hinman. The conversation is suspected to have influenced his thinking, making him grant an “easy pass” for Ether by not classifying it as a security.
A Twitter user identified as EDO FARINA XRP commented :
Hinman had a call with VITALIK to understand how ETHERIUM works to clarify the security question. That is the same as someone is accused of murder so let’s call only the suspect, ask him questions and make a judgment based upon his answers.
