The lawsuit between Ripple Labs and the U.S. Securities and Exchange Commission (SEC) has been entangled for nearly 2 years, and there have been new developments recently. Ripple said on the 21st that it has successfully obtained the “Hinman document” from the US SEC and declared its next victory.
Ripple’s general counsel Stuart Alderoty said in a post earlier today (21):
After 18 months of protracted litigation and six court orders, we finally have the Hinman filing, which is an internal SEC email and a draft of Hinman’s 2018 speech.
Over 18 months and 6 court orders later, we finally have the Hinman docs (internal SEC emails and drafts of his infamous 2018 speech). While they remain confidential for now (at the SEC’s insistence), I can say that it was well worth the fight to get them.
— Stuart Alderoty (@s_alderoty) October 20, 2022
In 2018, William Hinman, then director of the SEC’s corporate finance division, made it clear at an event that “ether is not a security.” 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.
Ripple believes that the above speech is important evidence in the lawsuit, which may add weight to Ripple’s claim that “Ripple is not a security” and may be able to counter the SEC’s claim, because the key point of this lawsuit is: the Whether the Ripple coins issued by the company in 2012 actually constituted a “securities sale”.
The U.S. SEC has long opposed the release of the documents, but U.S. District Judge Analisa Torres reversed that claim last month, ruling that the SEC must release documents from William Hinman’s speech as evidence.
It will take time to tell whether William Hinman’s phrasing was as significant as Ripple said, but the spatial and temporal circumstances surrounding that speech and Hinman’s actions are a clear source of confusion.
More importantly, this result is closely related to the future description of cryptocurrencies by the SEC, and is therefore closely watched by the industry.
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.