Advantage Ripple as judge blasts SEC’s hypocrisy
Cryptocurrency platform Ripple has been given a confidence boost in its long-running battle with the US Securities and Exchange Commission after the judge presiding over the case branded one of the SEC’s main arguments ‘hypocrisy’.
The courtroom saga began in December 2020 and, while it looked like being settled earlier this year, it is now understood it is likely to drag on into next year.
The case hinges around Ripple Labs’ XRP token, which the SEC claims is a security. It charged two top executives of Ripple Labs – Christian Larsen, the company’s co-founder, executive chairman of its board, and former CEO; and Brad Garlinghouse, the company’s current CEO – alleging they raised more than $1.3 billion through an unregistered, ongoing digital asset securities offering.
Ripple, however, maintains the allegations are false.
One of the most pivotal pieces of evidence threading throughout the legal battle, has been a speech made by William Hinman, the former director over the SEC’s Division of Corporation Finance, in which he clearly stated that Bitcoin and Ethereum were not securities.
Ripple’s lawyers have been adamant that the Hinman speech is critical evidence that could shatter the case against them which, essentially, is built around XRP being regarded as a security.
Last night, matters swung dramatically in Ripple’s favour when the SEC motion to have the Hinman speech effectively ring-fenced from the case under ‘client-attorney privilege’ was spectacularly thrown out by Magistrate Judge Sarah Netburn who labelled the motion ‘hypocrisy’.
“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,” she blasted.
The bombshell was greeted with delight in the Ripple corner, with defence attorney James Filan expressing particular satisfaction.
“Magistrate Judge Netburn denies the SEC’s attorney-client privilege claims. The predominant purpose of the communications was not to provide legal advice. The documents must be produced,” he beamed.
“That decision is what Black’s Law Dictionary defines as a body slam!”
Up until the early hours of this morning, the SEC had argued that Hinman had written the speech as a “personal errand”, suggesting it was entirely the personal viewpoint of the then SEC heavyweight, and not of the SEC itself.
The case continues.