Tuesday witnessed a significant development in the ongoing legal clash between payment company Ripple and the U.S. Securities and Exchange Commission (SEC), following the unsealing of the Hinman documents. These documents, comprising internal SEC communications about a 2018 speech by former SEC Director William Hinman, are anticipated to be of vital importance in the case at hand.
During his speech, Hinman noted that “based on my understanding of the present state of Ether, the Ethereum network and its decentralized structure, current offers and sales of Ether are not securities transactions.” An email from Hinman, now publicly accessible, reads, “Attached please find a draft of the speech I had mentioned, which suggests that we don’t need to regulate Ether, as it is currently offered, as a security.” While Ripple’s token, XRP, is not explicitly mentioned in the documents, they provide insight into defining a security, and this revelation led to a nearly 6% surge in XRP value, rising above $0.55.
Hinman also argued against considering Bitcoin a security, asserting that “applying the disclosure regime of the federal securities laws to the offer and resale of Bitcoin would seem to add little value.”
Ripple posits that the Hinman documents could greatly impact the SEC’s December 2020 lawsuit against the company, which alleges that Ripple carried out $1.3 billion worth of unregistered security sales using XRP. Ripple CEO Brad Garlinghouse expressed his belief that the wait for these documents would prove worthwhile in a tweet.
The company cites Hinman’s speech as evidence that the SEC does not deem Bitcoin or Ethereum securities, and therefore, XRP should not be classified as such either. Ripple states that the SEC has not proved XRP should be considered a security or an investment contract under US federal law in its defense. Following a Freedom of Information Act request, the company secured the documents in October 2022.
Despite the SEC’s attempts to keep the documents under wraps, arguing that they were irrelevant to the case and that Hinman’s statements were personal opinions, Judge Analisa Torres ruled last month that the documents should be disclosed to the public. This ruling has paved the way for further examination of the contentious concept of classifying cryptocurrencies as securities.
Source: Decrypt
