Attorney John Deaton, a lawyer representing 65,000 XRP holders in the ongoing legal tussle between Ripple and the SEC, has recently highlighted the reason why Ripple, the US-based cross-border payment firm, cannot sue William Hinman for his criminal violation.
In a series of tweets, Deaton shared his opinion regarding the risk in filing a lawsuit against Hinman following calls within the XRP community that say Hinman should be made to face justice.
According to the attorney, there is no proof yet that Hinman knew that Simpson Thacher was a member of the Enterprise Ethereum Alliance (EEA) before he joined.
John Deaton noted:
“The truth is anyone could file a suit today. But, as of right now, the case would get dismissed with prejudice based on the qualified immunity Hinman enjoys as a former government official.
“I have said if Hinman knew his law firm was a member of the EEA and he didn’t get approval from the Ethics Office (which he couldn’t), it would, IMO, constitute a violation of criminal conflict laws. But we must PROVE Hinman had actual knowledge that STB was a member of the EEA.
“We don’t have proof, yet. Only a fraction of Hinman’s deposition was disclosed to the public. I GUARANTEE during Hinman’s deposition he was asked whether he knew Simpson Thacher was a member of the EEA. I GUARANTEE he said that he wasn’t aware of it when he gave the speech.
“How can I be so sure? Because if he admits he knew his firm was a member of the EEA, he incriminates himself. It is a blatant violation of criminal conflict laws. If he admits he knew, he has to admit he should’ve sought clearance from the Ethics Office.”
Deaton said the Ethics Office would have never approved the speech if it had knowledge about his EEA membership and that he was a profit-sharing partner.
Hinman Is Waiting To Be Sued By Ripple
Attorney Deaton further added that he’s certain Hinman has been preparing to be sued by Ripple so that he could gain the chance to dismiss the case with his high priced lawyers and a team of lawyers from the SEC:
“I have no idea if the Ripple lawyers had evidence to the contrary when they cross-examined Hinman. Unless the Deposition is made public or relevant information appears in Ripple’s Summary Judgment papers, we won’t see it. This is why we MUST get an investigation.
“Trust me, Hinman hopes we sue him prematurely. His massive team of high priced lawyers along with a team of lawyers from the SEC will rush to dismiss the case. Hinman and the SEC will show up immediately invoking qualified immunity.”
Why it’s Risky for Ripple to Sue Hinman Now
According to Deaton, if Ripple files a case without no substantial evidence against Hinman, it could be dismissed by the Judge with prejudice, which would prevent the progress of any future related case.
He said although SEC claimed that the speech was Hinman’s personal opinion, it could show up at any case filed against Hinman to claim that the speech was an official SEC work product and therefore protected by immunity.
Deaton explained the risk as shared below:
“A federal judge is not going to let us engage in a fishing expedition and serve discovery requests on Hinman hoping we find proof of actual knowledge. Qualified immunity shields Hinman and other government officials from being served discovery. We need the evidence upfront.
“Thus, if we filed a case and the only evidence we have is Bill Hinman denying he knew his firm was a member of the EEA, the Judge would say there is no evidence Hinman acted outside the scope of his duties for his own personal gain.
“The fact that so many other SEC lawyers and staff helped him with the speech supports a claim that he wasn’t acting outside the scope of his duties as Director of Corporation Finance.
“Despite the SEC claiming it was his personal opinion in the Ripple case, does anyone seriously doubt that the SEC would show up in a case against Hinman and tell the Judge that the speech was an official SEC work product and therefore protected by immunity. Of course, they would.
“Without more proof, all we can show, today, is a gross appearance of impropriety. Ignoring the Ethics Officer’s warning not to meet with STB is enough to warrant an investigation but it’s not enough to pierce through the shield of immunity to overcome a motion to dismiss.
“An appearance of impropriety (even a gross one) is not enough to get over the hurdle of qualified immunity in the early stages of a civil lawsuit. The Judge would dismiss the case with prejudice. If a judge dismisses the case with prejudice, it could be game over for justice.
“If the case is dismissed with prejudice, it can prevent any future case from going forward, even if strong evidence of wrongdoing surfaced later. There are doctrines of law called res judicata and collateral estoppel that could be triggered by a dismissal with prejudice.
“If a second case was filed later, with additional evidence, Hinman’s lawyers could invoke these doctrines of law and a judge could rule that the issue was already decided and that he must honor the prior judge’s ruling.
“Even worse, when we ask a Congressman or Senator sitting on the Financial Services Committees to investigate, they might say “didn’t a federal judge look at this already and decide it lacked merit?” Imagine that. In fact, Hinman would love it. He could control the narrative.”