– On Tuesday, U.S. Magistrate Judge Sarah Netburn denied the SEC’s motion to keep the documents of an infamous speechin which the agencys former official William Hinman argued that Ethereum was not a securityunder wraps and ordered it to produce the documents for the Courts in-camera review.
– In December 2020, the SEC sued Ripple Labs Inc. and two of its executives, Brad Glaringhouse and Christian Larsen, alleging that the firm raised over $1.3 billion through an unregistered, ongoing digital asset securities offering.
– Throughout its defense, Ripple has argued that its utility coin, XRP, is not a security.
– As one of its main arguments backing its defense, Ripple has cited a speech by the agencys own former director of the Division of Corporate Finance, William Hinman.
– On Jun. 14, 2018, Hinman spoke at Yahoo Finances All Markets Summit: Crypto one-day event in San Francisco, in which he remarked on the agencys use of the Howey Test to determine whether ETH constitutes a security. He said:
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. And, as with Bitcoin, applying the disclosure regime of the federal securities laws to current transactions in Ether would seem to add little value.
– Ripple has argued that Hinmans remarks contradict the SECs claims that XRP is a security. In contrast, the agency has fought hard to keep the speech under wraps and block it from being used as evidence in court, asserting that it is a purely personal errand that doesnt reflect agency policy.
– On Tuesday, Judge Netburn denied the SECs motion to bring the internal documents related to the Hinman speech under attorney-client privilege and therefore block them from being produced before the court.
– Several legal experts commenting on the decision on Twitter have descibed the development as a significant win for Ripple. In a Tuesday tweet, Delphi Digitals general counsel Gabriel Shapiro said it was a big tactical win for Ripple.