SEC and Ripple are still locked in a legal battle, as Ripple plays a strong role in pointing out that the former director of the SEC’s Division of Corporate Finance confirmed in 2018 that Ethereum is not a stock.
In a 2018 speech, a statement made by the former director of the SEC’s Division of Corporate Finance, Bill Hinman, seemed to suggest that he does not consider Ethereum as a security. The SEC claimed the statement was Hinman’s own opinion, but Ripple later discovered an email chain between the SEC and a third party that appeared to indicate the opinion was that of the SEC, not just Hinman’s.
This has raised serious questions as to whether Mr. Hinman lied to the court. The judge forced the SEC to submit two documents related to the SEC’s meetings with law firms and the email chain, along with a submission explaining his claims of privilege for each of those documents by the 15th. October 2021.
Ripple’s attorneys are forcing the SEC to choose one of two positions; either that Hinman’s speech was his own opinion, meaning that there is no Deliberate Process Privilege (DPP) case to be made, or that Hinman’s views were policy, granting room for the DPP case to be made, but the views can be used as evidence against the SEC.
Ripple alleges requests for requests were overlooked
Ripple’s attorneys also called the SEC for failing to review nearly 30,000 admissions applications. The SEC responded by saying that the requests were burdensome and that it spent 100 hours responding to 254 RFAs. Calls for requests are used to reach a rapid consensus on issues between opposing entities in a legal action, and answers are considered to be given under oath and may be used against the defending party in court.
Following Ripple’s double-play, XRP price has shot up 9% in less than 24h.
How Ripple and SEC got involved in a lawsuit
Ripple denies that XRP is a security, with Brad Garlinghouse the CEO insisting that it should be viewed as a digital currency like Bitcoin and Ethereum. Garlinghouse was responsible for Ripple finding a use case for XRP in 2016. He pitched XRP as a bridge currency for global money transfers to financial institutions. Banks would not need to hold minor currency reserves. Partnerships with Moneygram and Santander saw it sell $1.38M of tokens, which was the catalyst for SEC action. The SEC initially filed a lawsuit against Ripple in December 2020, for making $ 1.38 billion by offering XRP as collateral.
