Key Takeaways:
- The Court asks SEC to reveal Hinman’s email regarding Ethereum to Ripple.
- SECs’ arguments regarding the documents were partly agreed to and partly denied.
- XRP is yet to be determined as security.
The crypto industry dodges a blow on Thursday as Ripple wins a critical procedural victory against Security and Exchange Commission (SEC). The federal judge ruled that the SEC will have to disclose the emails concerning the 2018 speech regarding Ethereum, earlier marked as privileged documents by the SEC.
The battle started when SEC claimed that Ripple had been selling unregistered securities. The news not only soiled Ripple’s reputation but also incinerated half of the 28 billion dollar market value of XRP (a cryptocurrency bound to Ripple). To this incident, Brad Garlinghouse, CEO of Ripple Labs, said, “I’ve always viewed myself as one of the good guys in Silicon Valley who does what’s right—only to have the U.S government assert in an inflammatory way you’re playing dirty.”
The speech that caused this mayhem was delivered by former top SEC official William Hinman, who stated Ethereum is a threat as it is amply decentralised. Referring to this speech, SEC argued in the court that Ripple and its top executives sold XRP to the public without registering it.
U.S Magistrate Judge Sarah Netburn ruled the session and “granted” the motion in part and “denied” in part. It agreed with the SEC regarding certain documents and rejected the agency’s argument not to disclose more than a dozen documents. The court stated, “Although Hinman and the SEC admit that agency staff discussed his speech, it appears that this speech was ‘merely peripheral to actual policy formation,’ Tigue, 312 F.3d at 80, and not an ‘essential link’ in the SEC’s deliberative process with respect to Ether, Grand Cent. P’ship, 166 F.3d at 482. Accordingly, emails concerning the speech or draft versions are neither pre-decisional nor deliberative agency documents entitled to protection.”
Though this will provide some clarity in the case of SEC vs Ripple, it is only procedural. Crypto investors are still awaiting the decision regarding XRP, which is yet to be declared as security.
