Ripple vs. SEC: New Evidence Tips the Scale in Ripple’s Favor
Recent documents have been disclosed in relation to William Hinman, the former director of the U.S. Securities and Exchange Commission (SEC)’s Division of Corporation Finance from 2017 to 2020, pertaining to the ongoing SEC lawsuit against Ripple Labs.
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These papers reveal comments made by the Trading and Markets Department on the draft of Hinman's 2018 speech, in which he suggested that bitcoin (BTC) and ether (ETH) are not securities.
In an email sent to numerous SEC employees prior to delivering his speech, Hinman stated, “we do not need to see a need to regulate Ether, as it is currently offered, as a security.” The Trading and Markets Department expressed support for this view in its comments, believing it answered the public's questions about the SEC's stance on cryptocurrencies.
The department did caution, however, about taking too firm a stance on bitcoin, as it could compromise the SEC's efforts with other cryptocurrencies that do qualify as securities. Furthermore, it raised concerns over the assertion that ether was not a security, stating that a sweeping statement of this nature would necessitate further internal discussion.
In December 2020, the SEC launched a significant lawsuit against Ripple Labs, alleging that the company raised more than $1.3 billion through an unregistered digital asset securities offering involving its cryptocurrency, XRP. Hinman has since become a crucial figure in this lawsuit, which was ordered by the U.S. District Court for the Southern District of New York.
Ripple Labs has consistently referred to Hinman’s comments throughout the legal proceedings, arguing that they contradict the SEC’s assertion that XRP is a security.
Ripple has been attempting to secure these documents since late 2021. Brad Garlinghouse, Ripple’s CEO, suggested that these documents were well worth the wait.
This disclosure could significantly fuel the debate surrounding the classification of cryptocurrencies as securities, especially during these challenging times for the crypto sector. Recently, the SEC has filed lawsuits against crypto exchanges Coinbase and Binance, accusing them of selling unregistered securities.
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