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Ripple Obtains Long-Searched Documents of Former SEC Official Declaring Ethereum Not a Securities

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A veritable treasure trove of email messages and documents from within the Securities and Exchange Commission has been handed over to Ripple, whose founders created the XRP cryptocurrency and now find themselves accused in a high-profile legal battle with the regulator. XRP was illegally sold as an unregistered security.

Ripple general counsel Stuart Alderoty broke the news on Twitter on Thursday, declaring victory in an 18-month war (within the larger war) over the collection of exploratory materials dubbed “Hinman documents.”

The documents revolve around a widely publicized speech by former SEC director William Hinman in 2018 declaring that Ethereum – like Bitcoin – is “decentralized enough” and therefore not subject to federal securities regulation.

Hinman’s statements that day represent the thickest cloud currently looming over the ongoing debate over crypto regulations and play a key role in the SEC’s lawsuit against Ripple in December 2020, and Ripple’s disregard for XRP. claims to be selling it as a security. With a market cap of $22.3 billion, XRP is currently the sixth largest cryptocurrency, according to CoinGecko.

Last month, a federal district judge dismissed the SEC’s repeated attempts to block Ripple from accessing the documents, saying he believes the company will uncover the “two winners” in the crypto space, the internal discussions and debates that led to the controversial statement that appears to support Bitcoin. and at the expense of alternatives like Ethereum, XRP.

Ripple initially won the right to request the documents in January. Some industry observers thought the documents would not greatly strengthen Ripple’s case, but these assumptions are wrong, according to Alderoty.

“While they remain hidden for now (at the insistence of the SEC), I would say it was worth the fight to get them,” he tweeted. “I’ve always felt good about our legal arguments, and now I feel even better. I’ve always felt bad about the SEC’s tactics, and now I feel even worse about them.”

Ripple CEO Brad Garlinghouse went even further. Even as the company celebrated its 10th anniversary hours before the documents were released, it was outraged on Twitter.

The SEC’s pursuit of a policy goal isn’t about ‘a faithful adherence to the law’ – it’s about power,” he wrote, adding: “There’s no respect for the companies and people this approach hurts. We should all be angry. The SEC has clearly forgotten that the government is working for the people.”

In response to his general counsel’s announcement, Garlinghouse once again criticized the SEC, saying “don’t believe them” when they claim they care about “disclosure, transparency and clarity.”

When the truth finally comes out, the embarrassment of his behavior here will shock you,” he added.

While accessing the documents surrounding Hinman’s 2018 speech provides important insight into his and his colleagues at the SEC’s thought process, Ripple’s attorneys also expect to be able to hear directly from Hinman, having recently gained the opportunity to fire the former SEC director. year. This decision came shortly after another court blocked the SEC’s attempt to access records surrounding Ripple’s executive compensation.

The development will certainly rekindle the long-standing dispute that both Ripple and the SEC recently called for summary judgment rather than a trial. The pressure for a speedy settlement of the lawsuit preceded a 44% increase in the value of XRP.

Ripple opposed the SEC’s move, declaring that the agency “has no valid legal theory to support its central claim” that Ripple should register XRP as a security.

Just last week, a judge accepted a request from individual XRP holders to participate in transactions.

Notably, current SEC chairman Gary Gensler has not commented publicly and privately on Hinman’s assessment and has limited his remarks to Bitcoin – the director avoided the Ethereum waters that shook Hinman.

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