Ripple gains approval for ex director to be used in SEC case
Comments by former SEC chief William Hinman help argue that XRP is not a securities asset
Ripple (XRP) has been granted permission to use comments by former Securities and Exchange Commission (SEC) chief William Hinman made in 2018 in its case against the US financial regulator.
The move is being seen as a win for XRP as Judge Sarah Netburn indicated that Hinman’s comments could be a turning point in the case.
It hinges on a Yahoo Finance Summit in June 2018, when former SEC chief Hinman said in a speech that the Ethereum (ETH) network and the decentralised structure it works from “are not securities transactions”.
It's now possible that Hinman, the former director of the division of corporation finance, could be called to take the stand this coming Monday.
The SEC has fought to stop this happening, as Ripple's lawyers could ask Hinman if the thinking behind his remarks on ETH could be applied to XRP. Ripple Labs is fighting the legal battle with the SEC to prove XRP is not a securities asset.
2018 comments could help XRP’s case
During Hinman's 2018 speech – which is even posted on the SEC website – he outlined both Bitcoin's (BTC) and Ethereum's decentralised networks.
Hinman explained back in 2018: “Putting aside the fundraising that accompanied the creation of ether, based on my understanding of the present state of ether, the Ethereum network and its decentralised structure, current offers and sales of ether are not securities transactions.”
Speaking in a personal capacity
The SEC argued that Hinman’s comments should not alter the case as he was speaking in a personal capacity. It also claimed such a move “would subject high-level government officials to depositions regarding every law, regulation or policy they consulted on or spoke about and that later underlay an enforcement action".
The financial regulator also argued that it does not speak through its staff or individual commissioners but through enforcements and actions. The SEC also said that anything Hinman said is privileged as “deliberative” and that “Exemption 5” would be invoked if he was deposed.
Since leaving the SEC, Hinman has returned to his previous employer Simpson Thacher & Bartlett, an international law firm which is part of the Enterprise Ethereum Alliance (EEA).
Judge Netburn concluded “…the amount in controversy is substantial and the public’s interest, in this case, is significant”.