As the Ripple-SEC cryptocurrency legal tussle of the century lingers, Judge Sarah Netburn, the United States Magistrate in the Southern District Court of New York, has pinpointed some elements of hypocrisy found in the statements of the US. Securities and Exchange Commission (SEC). Ultimately, the documents surrounding William Hinman’s controversial speech are important for both Ripple Labs Inc. and the US. SEC.
The Genesis of the Contentions
In 2018, William Hinman, a former official of the United States Securities and Exchange Commission stated that “all digital coins except Bitcoin and Ethereum were possibly illegal and unregistered securities.” Subsequently, the SEC filed a case against Ripple Labs Inc. in late 2020, contending that the company sold unregistered XRP tokens.
We Are On Twitter: Follow Us
Consequently, this speech from William Hinman has been a focus topic in the prevailing case. Ripple brought forward the speech and demanded that the documents be tendered in court.
The SEC has since been employing different strategies to keep the documents surrounding Hinman’s speech hidden even when ordered by the court to surrender them.
Recently, the SEC even tried to invoke the attorney-client privilege to protect these internal documents. Judge Netburn rejected this motion concluding that the documents must be produced.
Ripple believes that these documents will give them some added advantage in the case. Precisely, lawyers representing the crypto solutions company, consider the drafts of William Hinman’s speech and other connected writings as critical exhibits. For these reasons, Ripple attorneys are pressing hard for the documents to be brought forward.
On the other hand, revelations from the documents could put the securities watchdog in an unfavorable position. The SEC fears that the documents in question could infer that the XRP token was unfairly singled out for enforcement action.
Judge Netburn Accuses the SEC of Hypocrisy
In a recent update, Judge Netburn has slammed the regulatory body for “hypocrisy,” considering the inconsistencies in the SEC’s viewpoints on the 2018 Hinman speech. The District Judge said;
“The hypocrisy in arguing to the court, on the one hand, that the speech is not relevant to the market’s understanding of how or whether the SEC will regulate cryptocurrency and, on the other hand, that Hinman sought and obtained legal advice from SEC counsel in drafting his speech, suggests that the SEC is adopting its litigation positions to further its desired goal and not out of a faithful allegiance to the law.”
Initially, the SEC stated that the speech, made by the former director of corporation finance, William Hinman, was not intended to give market guidance by the commission. The SEC stressed that it was an individual opinion.
The regulatory body later reversed its statement when the Judge demanded that Hinman’s speech documents be tendered in court. The now Gary Gensler-led agency has come up with a fresh claim that “the speech and its corresponding drafts were not just Hinman’s opinion rather the opinion of the Division of Corporation Finance. Hence, should remain confidential based on attorney-client privileges.”
Who Will Win the Case?
Worthy of note is that a win for Ripple will be massive for the entire cryptocurrency industry. Categorically, the SEC Chair’s efforts to get a hold of the crypto industry will experience a setback if Ripple Labs win the ongoing lawsuit.
Whereas, a win for the SEC could bring hardened regulatory policies on crypto. While the court battle continues, Ripple’s CEO had earlier said that the company will move its services away from the United States if it ends in favor of the securities agency.