Ripple Labs won a lengthy battle with the Securities and Exchange Commission (SEC) on Sept. 29 after U.S. District Judge Analisa Torres ruled that the SEC must release documents written by former official William Hinman as evidence . Ripple (XRP) jumped 10% on the news.
“Ether is not a security,” Hinman said in a June 2018 speech at the Yahoo Finance Yahoo Finance All Markets Summit, a market seminar.
Ripple believes that the above speech is important evidence in the lawsuit. Ripple has consistently claimed that Ripple (XRP) is similar to Bitcoin and Ethereum, both of which are classified as “commodities” by the SEC. Therefore, William Hinman’s remarks may add weight to Ripple’s claim that “Ripple is not a security” and may be able to defeat the SEC’s claim, because the lawsuit is the key point: the company’s Ripple issued in 2012. , whether it actually constitutes a “securities sale”.
It will take time to tell whether Hinman’s phrasing was as significant as Ripple said, but the spatial and temporal circumstances surrounding that speech and Hinman’s actions were a clear source of confusion.
Judge Analisa Torres’ ruling overturned the SEC’s objection to the publication of the documents after District Judge Sarah Netburn ordered that emails and drafts of the speech were not protected by “deliberative process privilege,” while the SEC asserted , the documents have attorney-client privilege, but Judge Netburn struck down that claim in July. The SEC then challenged Judge Netburn’s ruling, which was now overturned by Judge Analisa Torres.
In short, the SEC must now release Hinman’s speech documents.
In that June 2018 workshop, Hinman made it clear that the ethereum network, cryptocurrencies and trading do not constitute securities-related activities. He says:
Based on my understanding of the current state of Ethereum, the Ethereum network and its decentralized structure, the current issuance and sale of Ether is not a security transaction.
More importantly, this result is closely related to the future description of cryptocurrencies by the SEC, and is therefore closely watched by the industry.
Ripple’s price surged 10% following the latest news, and was quoted at $0.50 at press time. However, compared to its all-time high of $3.4, Ripple is still 85% lower than it was then. The SEC’s lawsuit is seen as one of the factors that caused the price of Ripple to plummet.
The SEC filed suit against Ripple in December 2020 along with CEO Brad Garlinghouse and former CEO Chris Larsen, alleging that Ripple is a security because the company used it to raise money in 2013. This case is quite rare for a case initiated by the SEC to go to trial, so it may result in a precedent-setting decision rather than a settlement.
The case was initially seen as bad for Ripple, which used a variety of tactics to defend itself. Ripple and the SEC filed a motion in the U.S. District Court for the Southern District of New York on the 17th of this month for a summary judgment.