The internal correspondence to accompany the preparation of a “landmark” speech by William Hinman, Former Director of the Division of Corporate Finance at the SEC, was released. It raises many questions and strengthens Ripple Labs’ position in the case against the SEC.
According to the court order in the SEC’s case against Ripple Labs, the internal correspondence accompanying a speech prepared by William Hinman, Former SEC Director of Corporate Finance, was published. He stated that ETH wasn’t a security.
The original documents are posted on the website of the Federal District Court for the Southern District of New York, though access is limited. However, a copy of the published documents is available.
The documents reveal that William Hinman’s colleagues were concerned about his speech and pointed out the questionable nature of certain parts of it, but their comments were ignored. In particular, the SEC directors warned that the statements he prepared could put the agency in a position that would be difficult to change later.
Stuart Alderoty, Ripple’s Chief Legal Officer, called for an investigation into the former SEC director and his motives for making his statements, ignoring questions and comments from his colleagues. Specifically, he alluded to a possible connection between William Hinman and lobbyists from the Enterprise Ethereum Alliance (EEA), as Hinman was employed by Simpson Thacher & Bartlett LLC, a law firm within the EEA, before and after his time at the SEC.
Brad Garlinghouse, Ripple’s CEO, also criticized the former SEC director’s actions and called the regulator’s lawsuit against Ripple Labs the “deplorable, politically-motivated overreach.”
The current SEC Chair Gary Gensler also repeatedly stated in the past that ETH, BTC, and some other cryptocurrencies weren’t securities. Videos of his similar statements are gradually surfacing from the archives and then actively spreading on Twitter. For example, a video of Gensler’s similar statement that recently appeared online was recorded at a conference held by Bloomberg in New York in 2018. Most notably, in April 2023, during a public hearing in the House of Representatives, Gary Gensler refused to answer whether ETH was a security.
Experts believe that the published documents won’t play a decisive role in the SEC vs. Ripple Labs case, but they reinforce Ripple’s position that William Hinman’s speech caused confusion and prevented market participants from understanding exactly what the existing rules prohibit. Moreover, the published documents strengthen the position of those forces in Congress who believe that the SEC is an inappropriate institution to regulate the digital asset market.
