Sunday, January 22, 2023

SEC Begs Court Not To Disclose Hinman Documents

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While U.S. Securities and Exchange Commission (SEC) chairman Gary Gensler is calling for a crackdown on the crypto industry based on existing laws and jurisprudence, he may find his nemesis in Ripple and the battle over the Hinman documents.

As Bitcoinist reported yesterday, redactions of all documents related to the summary judgment were due to be filed by the SEC and Ripple by yesterday. Both parties met that deadline in a timely manner. And the SEC’s filing reveals that it is still not ready to release the Hinman documents to the public.

In the document, the SEC is begging district judge Analisa Torres not to release the documents, while also issuing a threat:

The SEC respectfully maintains that the Hinman Speech Documents are protected by privilege.

But if these documents were to become part of the public record, the SEC would be foreclosed from making any such argument in the future (on appeal in this litigation or in other litigation), which would be highly prejudicial to the SEC.

Is Ripple Becoming The SEC’s Nemesis?

Ripple community attorney Jeremy Hogan commented on this paragraph in the document: “The SEC is STILL arguing that the Hinman emails are privileged despite losing that issue about 100 times already. Blows my mind. AND makes me recurious (is that a word?) about what is in them.”

Another community lawyer, Bill Morgan, points out the threat the SEC is making. According to the SEC, Torres is not authorized to release the Hinman documents because they could appeal the summary judgment decision.

Ultimately, the agency argues that it did not waive the privilege against the public because it turned the emails over to Ripple as ordered. “I’m not sure how the SEC can argue that it didn’t waive the privilege when the court has determined that they are not privileged,” Morgan noted.

Further, the attorney contended that under the court’s findings, there is no privilege that can or cannot be waived. At the same time, Morgan concedes legitimacy to the SEC’s argument because the SEC could still appeal. This does not definitively settle the confidentiality issue.

“It is not a question of the value of the decision in this case as a precedent but a question of res judicata,” Morgan said.

Still, the SEC’s statement makes clear that Hinman is paramount to its “law by enforcement” policy. Another victory for Ripple at this point could be a victory for the entire crypto industry.

Back in late September, Judge Torres ruled that the Hinman documents must be turned over to Ripple Labs after months of litigation. The documents, authored by former SEC Corporation Finance Division Director William Hinman, primarily relate to a speech the executive gave at the Yahoo Finance All Markets Summit in June 2018.

Hinman stated in his speech that Ethereum (ETH) is not a security. Ripple considers the speech a key piece of evidence to prove the ambiguous legal regime for crypto in the U.S. – which even SEC employees can’t navigate.

The statement that the “SEC would be foreclosed from making any such argument in the future” reveal the massive implications.

At press time, the XRP price was trading at $0.3494.

XRP price, 4-hour chart

Featured image from Fox Business, Charts from TradingView.com

Numisteamone

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