An interesting development has emerged in the ongoing legal battle between Ripple and the U.S. Securities and Exchange Commission (SEC). A set of emails released by Ripple as part of its defense provide a new perspective on the SEC’s internal deliberations on whether Ether should have been regulated as a security in 2018.
In the published emails, former SEC Director of Trading and Markets Brett Redfearn raised concerns about the vagueness of one-time Director of Corporation Finance William Hinman’s speech, which stated that Ether did not look like a security. Redfearn suggested that the language used in the speech could have been clearer in expressing the view that Ether was not a security. He also noted that some parts of the speech seemed “likely to create more confusion about the status of ETH.”
On the other hand, Valerie Szczepanik, the current head of the SEC’s FinHub group, believed that providing less detail in the speech was better. She wrote, “This is introducing a concept, that will probably generate much discussion, and so leaving room for that discussion is good I think.”
Several officials in the email exchange referred to the landmark Supreme Court case, SEC v. W. J. Howey Co., which serves as the basis for determining whether something is a security. Emphasizing the importance of the Howey Test, Laura Jarsulic, an attorney with the SEC’s Office of General Counsel, pointed out situations where a token could indeed be considered a security.
As the debate on Ether’s status unfolded, Ripple faced allegations of selling unregistered securities in the form of XRP tokens for over seven years. Ripple has always sought to distance itself from XRP, but inevitably, any progress in the case affects the token’s prices.
Following the release of the emails, Ripple Chief Legal Officer Stu Alderoty sharply criticized their content, arguing that Hinman ignored several warnings about the made-up analysis with no basis in law. He claimed that the speech not only created confusion but also exposed regulatory gaps.
In conclusion, the internal emails offer a glimpse into the complexities surrounding the regulatory status of cryptocurrencies like Ether and XRP. While some within the SEC argued for clear statements on whether they should be considered securities, others preferred a more cautious approach that sparks further discussion. The ongoing Ripple case, however, highlights the need for a better understanding and a more definite stance on the matter.
Source: Coindesk
