As part of the Ripple v. SEC case, the court officially released documents related to the 2018 speech by former regulator William Hinman.
In his 2018 speech, the former director of the agency’s corporate finance department said that for some reasons Bitcoin and Ethereum are not securities.
According to the documents, Hinman also corresponded with Vitalik Buterin, cofounder of the second-largest cryptocurrency by market capitalization, to clarify how the Ethereum Foundation operates.
“A digital asset or token is a security when it represents a set of rights that give the holder a financial interest in an enterprise. […] But what about those cases where there is no centralized company into which funds are invested, and when the coin is sold only to be used to buy goods or services?” — the former official.
In an email to staff of his department, Hinman suggested that “there is no need to regulate Ethereum the way it is currently — as a security”.
Here are the #XRP #Ripple Hinman emails pic.twitter.com/l4BmiStrKE
— Cheeky Crypto (@CheekyCrypto) June 13, 2023
“Seeing the depth to which the SEC has essentially weaponized the lack of regulatory clarity through enforcement actions since this speech was given – it’s no surprise that we can call bluff on their claims to “just come in and register” as nothing but in bad faith.”
— Brad Garlinghouse (@bgarlinghouse) June 13, 2023
“Given the depth to which the SEC has used the lack of regulatory clarity through enforcement actions since that speech was given, it’s not surprising that we can call bluff and bad faith their call to ‘just come and register’,” said the lawyer.
Ripple lawyer Stuart Alderoty urged an investigation into Hinman.
13/An investigation must be conducted to understand what or who influenced Hinman, why conflicts (or, at the very least, appearances of conflicts) were ignored, and why the SEC touted the speech knowing that it would create “greater confusion.”
— Stuart Alderoty (@s_alderoty) June 13, 2023
“An investigation must be conducted to understand what or who influenced Hinman, why conflicts (or, at least appearances of conflicts) were ignored, and why the SEC touted the speech knowing that it would cause ‘greater confusion’,” the lawyer wrote.
The XRP token rose by nearly 7%, jumping from $0.529 to $0.561. At the time of writing, the asset’s price had fallen back to around $0.531.
In December 2020 SEC filed a lawsuit against Ripple, accusing the company of selling unregistered securities.
Later Fox Business published a comprehensive investigation into the case. Journalists concluded that those behind the filing and the case could have affiliations with Ethereum.
Ripple’s lawyers for much of the proceedings tried to obtain documents related to Hinman’s speech and build a defence on that basis.
In its motion, the SEC argued that its mission “overwhelms the public’s right to access” information that “has no bearing” on the decision in expedited proceedings.
As reported in June 2023, lawyer John Dieton assessed the regulator’s chances of winning the Ripple case at 3%.
Earlier lawyer Jeremy Hogan stated that XRP is not a security and only “perhaps fits the definition of an investment contract.”