XRP reached a 10-week high after documents related to former Securities Exchange Commission (SEC) Director William Hinman were made public. The SEC filed against Ripple in December 2020, alleging that the company and two senior executives had raised $1.3 billion through the sale of XRP tokens, which the agency deems unregistered securities. A major part of Ripple’s defense is determining the SEC’s securities classification process and figuring out why XRP was singled out while other cryptocurrencies like ETH and BTC were not. To establish this, internal SEC documents, including records related to the “Hinman speech,” were required to be released.
The Hinman Documents
Last month, Judge Torres denied the SEC’s motion to seal the internal documents related to the Hinman speech, stating that they were not protected by deliberative process privilege. The speech effectively greenlit the two biggest cryptocurrencies by stating that a cryptocurrency might no longer be classified as a security if its network becomes sufficiently decentralized. Hinman gave BTC and ETH as examples of digital assets that meet these criteria. During the ongoing lawsuit, it was established that the comments made in the speech were Hinman’s personal views and should not have been interpreted as SEC policy.
On June 13, internal SEC documents related to the Hinman speech were released to the public, representing a further blow to the SEC. Ripple’s Chief Legal Officer, Stuart Alderoty, pointed out several instances of the agency ignoring feedback from its Head of Trading and Office of General Counsel. These included over-complicating the Howey test, straying too far from the Howey standards, and the “regulatory gap” related to investors of cryptocurrencies with “sufficiently decentralized networks” still benefiting from registering with the agency. An email from Hinman dated June 4, 2018, also stated that he saw no need to regulate ETH as a security and mentioned a phone call with Ethereum co-founder Vitalik Buterin “to confirm our understanding of how the Ethereum Foundation operates.”
Alderoty called for an investigation into “what or who influenced Hinman” and why feedback on the speech was ignored. He also inferred that Hinman had overstepped his remit by creating law without the authority. XRP had given up most of the day’s gains, sinking to $0.5274 at the time of press.
XRP spiked to a 10-week high after internal SEC documents were made public, and Ripple’s defense in the lawsuit against the SEC gained further support. The Hinman documents showed instances of the agency ignoring feedback and raised questions about who influenced Hinman’s views. Ripple’s Chief Legal Officer called for an investigation into the matter, and XRP’s price had dipped by the time of press.