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- 1 Hinman documents found in discovery as judge dismisses motion to seal from SEC
- 2 Ripple to disclose important documents related to XRP sales as judge dismisses motion to seal
- 3 The pro-crypto lawyer believes that judgment could come any day now
The future of cryptocurrency regulations depends a lot on the ongoing case of Ripple Labs vs the Securities and Exchange Commission.
Two years ago in December 2020, the SEC sued Ripple over selling XRP, which was considered an unregistered securities offering.
The SEC named Ripple’s former CEO Chris Larsen and current CEO Brad Garlinghhouse in their charges against the company. Most firms that receive such charges from the SEC try to settle, unlike Ripple. Ripple decided to fight against the commission and take matters to the court.
Ripple in its defense mentioned that their token XRP does not satisfy the Howey test and hence cannot be concluded as an investment contract. Ripple further argued that even if XRP was a security the SEC has failed to provide a fair notice under the securities law.
Importance of the Hinman documents
In 2018 former SEC director William Hinman gave a speech in which he stated that given the centralized nature of Ethereum ETH, it should not be considered a security. He further added in his speech that the current offering and sales of Ethereum are not securities transactions.
The speech was quite significant for the industry as it signaled that cryptocurrencies could be turned into commodities from securities when they were first created.
The Hinman documents were requested by Ripple as a part of discovery and were granted to them in October 2021. Ripple requested the documents since they could be a part of Ripple’s defense but the SEC has tried to pass the motion of sealing those documents on multiple occasions. The SEC argued that those documents are irrelevant to the current court judgment.
Judge Torres dismissed SEC’s motion to seal and ruled that Hinman’s documents are judicial and are subject to strong presumption on public access on May 16.
In SEC’s defense questions can be raised on Hinman’s conflict of interest. During the time Hinman made his speech he was working at a law firm that was a member of the Ethereum advocacy organization before and after his tenure at the SEC.
Who Can Win the Case?
Although it’s too early to predict what the court might decide there have been a few motions against Ripple as well. The court has not allowed motions to seal a few documents of Ripple that include, Ripple’s revenue with XRP, compensation for trading platforms, and a few other things related to the XRP sale.
Deaton in his Twitter space highlighted a few sections where he feels that the evidence could hurt Ripple’s chances.
He added that after reading Ripple’s documents the chances of complete victory for Ripple are slimmer but he believes SEC won’t get a complete victory either.
Deaton also speculated that the court can very much fine the early sales of XRP which is related to the initial coin offering and other transactions of boosting the network. Although he still believes that XRP’s secondary sales and the coin itself cannot be termed as securities.
Conclusion of the Case?
Pro-crypto lawyer Fred Rispoli posted a Twitter thread on May 17 saying that the summary judgment has already been decided and could be announced any day now. He also agreed that the chances of a split decision are very likely.
Deaton during the Twitter space said that he knows what Judge Torres might rule but what is written exactly in the final form would be complete speculation.
Deaton added that although the decision can come anytime it could also take a month or so longer.
Nancy J. Allen is a crypto enthusiast, with a major in macroeconomics and minor in business statistics. She believes that cryptocurrencies inspire people to be their own banks, and step aside from traditional monetary exchange systems. She is also intrigued by blockchain technology and its functioning. She frequently researches, and posts content on the top altcoins, their theoretical working principles and technical price predictions.
