After much anticipation, the long-awaited documents regarding William Hinman and the U.S. Securities and Exchange Commission’s (SEC) stance on classifying cryptocurrencies have finally been released. These documents have significant implications for the U.S. SEC’s ongoing lawsuit against Ripple Labs as it sheds light on the regulator’s internal discussions and opinions.
William Hinman served as the director of the SEC’s Division of Corporation Finance from 2017 to 2020, and the disclosed documents pertain to his 2018 speech, where he expressed his belief that bitcoin (BTC) and Ether (ETH) should not be considered securities. The documents reveal feedback provided by the SEC’s Trading and Markets Department on the initial draft of Hinman’s speech.
The U.S. SEC’s 2020 lawsuit against Ripple Labs alleges that the company conducted unregistered security offerings through its cryptocurrency XRP, raising over $1.3 billion. Ripple Labs has been actively seeking the release of these documents since late 2021, as they intend to use them to challenge the SEC’s claim that XRP is a security. These documents are expected to highlight contradictory statements made by William Hinman regarding the status of Ethereum.
According to these documents, in an email sent to several SEC employees prior to the speech, Hinman indicated that his intention was to emphasize that there was currently no urgent need to regulate Ether as a security, given its existing state. The recipients of the mail expressed support for this viewpoint, stating that the speech effectively addressed public concerns and conveyed a positive message.
These staff members further acknowledged that adopting an overly rigid stance on Bitcoin might jeopardize the SEC’s progress in regulating other cryptocurrencies classified as securities. They raised concerns about a section of Hinman’s speech that categorically stated that Ether was not a security, suggesting that such a statement would require additional internal deliberation.
Ripple’s CEO, Brad Garlinghouse, expressed his anticipation for the disclosure of these documents in response to a comment on Twitter. “I believe they are well worth the wait,” he tweeted.
Wish I could go in depth now, but we’ve waited this long (18+ months), I don’t want to overstep… suffice it to say @s_alderoty and I believe they were well worth the wait.
— Brad Garlinghouse (@bgarlinghouse) June 12, 2023
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