The SEC had a motion to suppress the deposition of William Hinman, the former director of SEC’s Division of Corporation Finance, which was denied by the US District Court Judge Sarah Netburn.
Back in 2010, Hinman expressed his sentiments on ethereum through a speech, whereby he said the ethereum network, together with its decentralized structure and the sales of ether, are not securities transactions. This is the same thing that happened to Ripple and gives it a strong bearing as the XRP token may also not be suitable as security. If the SEC fails to appeal, Ripple may demand that Hinman explains the reasoning behind his decision on ether at that time and apply the same concept to XRP.
According to Ripple, the SEC has no right to regulate XRP as a security because it’s mainly used as a medium of exchange for transactions.
In Bloomberg’s opinion, the current battle with SEC will put high government officials in the spotlight regarding the enforcement of the token. The SEC argued that it did not oblige Hinman to speak on its behalf as it does not need any individual or staff to speak on their behalf. It instead speaks through enforcement actions. The SEC, therefore, does not acknowledge what Hinman said in regards to the ether situation. It argued in court that what Hinman said is deliberative, which can be invoked If he is deposed.
According to the judge, the case represents policy decisions in the market, as much as it is controversial and done for the public’s interest.
Ripple’s fight with SEC
Ripple has been having lawsuits with the SEC for a long time now. At the end of 2020, the SEC had a case against its CEO and co-founder, accused of running unregistered digital assets and security offerings through the XRP token sales. The case was on the basis that XRP could not act as a security.
In Mid 2021, Ripple still faced accusations from SEC for issuing false statements against its leadership on social media. The SEC demanded a conference to clarify the situation and make a ripple clarify its ideas on high-ranking government officials so that it does not interfere with the company’s operations.
In November 2020, Before Hinman left the agency, he commented that SEC is open to financial technologies such as cryptocurrencies and blockchain without necessarily needing further regulations.