A recent ruling in the ongoing legal battle between Ripple and the Securities and Exchange Commission (SEC) pertaining to the issuance of XRP and the allegation by the Commission it is in fact an unregistered security took a turn in favor of Ripple this past week. In what is being described by some as a “really big win” the court denied a motion by the SEC pertaining to the epic speech by former CorpFin Director Bill Hinman.
In a case that seems to be ongoing for years, the referenced speech by Hinman has to do with when the official declared that Ethereum is not a security. At that time, Hinman stated:
“And 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 decentralized structure, current offers and sales of Ether are not securities transactions.”
The SEC attorneys arguing the case first claimed that Hinman was representing his own view on the matter and not the SEC’s. They then changed their mind.
“The SEC’s assertion that the Speech was intended to communicate Corporation Finance’s approach to regulating digital asset offerings is inconsistent with the SEC’s and Hinman’s previous position that the Speech was intended to and did reflect his personal views. See ECF No. 255 (SEC Letter Motion to Quash Subpoena) at 3 (“Director Hinman . . . [made] a public speech on June 14, 2018, in which he expressed his own view that the offers and sales of the digital asset Ether at that time were ‘not securities transactions,’ based on his understanding of the specific facts and circumstances of Ether and the structure of the Ethereum blockchain at the time.”
And;
“The SEC seeks to have it both ways, but the Speech was either intended to reflect agency policy or it was not. Having insisted that it reflected Hinman’s personal views, the SEC cannot now reject its own position. The Speech was not an agency communication, and the deliberations as to its content are not protected by the privilege.”
In an attempt to distill the issue, the court requires the SEC to release documents that may undermine its overall case and crypto enforcement in general.
Lawyer John Deaton, an attorney who has chronicled the odyssey from the beginning, said the ruling was not just a win for Ripple but for the judicial system.
This is not just a win for @Ripple and #XRPHolders, but for the judicial system. After the March 2021 hearing, I said we were lucky to get Judge Netburn. Some of you disagree, but I still believe it. The SEC is now officially in a hurt locker. https://t.co/MuSC8ORrd2
— John E Deaton (@JohnEDeaton1) April 11, 2022
While this is not over yet, the battle is by no means leaning towards a win for the Feds.
XRP is a top ten crypto with a market cap of over $37 billion and a legion of XRP holders. If the SEC gets its way, it will destroy all of that value. Is that what the government is really about? You tell me.
What should be clear for all is the SEC should have been working with industry participants to craft a workable regulatory environment as opposed to its regulation by enforcement that persists to this day.
The actual filing is viewable here.