The SEC and Ripple are still in litigation as Ripple has played a powerful role, stressing that the SEC’s former director of corporate finance confirmed in 2018 that Ethereum is not a security.
In a 2018 speech, a statement from Bill Hinman, the former director of the corporate finance department of the US Securities and Exchange Commission, appeared to suggest that he did not consider Ethereum a security. The SEC claimed the statement was Hinman’s own opinion, but Ripple subsequently discovered an email link between the SEC and a third party suggesting that the opinion was the opinion of the SEC and not just Hinman’s opinion.
This raises serious questions about whether Mr. Hinman lied to the court. The judge has forced the SEC to submit two documents related to the SEC’s meetings with the law firm and email chain, as well as a document explaining their privilege claims for each document by October 15, 2021.
Ripple’s lawyers are forcing the SEC to choose one of two positions; either Hinman’s remarks are his own, meaning there is no Deliberate Process Privilege (DPP) case, or Hinman’s view is a policy that allows for DPP cases to be used as evidence against the SEC.
Ripple’s attorneys also said the SEC failed to review nearly 30,000 filings. The US Securities and Exchange Commission responded that these inquiries were extensive and that it took 100 hours to respond to 254 RFAs. RFA is used to quickly reach consensus on matters between the opposing parties in the dispute, and the response is deemed to be on oath and can be used in court to confront the defendant.
After Ripple’s double play, the price of XRP rose by 9% in less than 24 hours.
The Case Between Ripple and SEC
Ripple denies that XRP is a security, and CEO Brad Garlinghouse insists that it should be viewed as a digital currency like Bitcoin and Ethereum. Garlinghouse was responsible for finding use cases for XRP for Ripple in 2016. He positioned XRP as a bridge currency for global transfers to financial institutions.
Banks do not have to hold secondary currency reserves. Working with Moneygram and Santander, tokens valued at $1.38 million were sold, which was a catalyst for the SEC’s actions. The US Securities and Exchange Commission first filed a lawsuit against Ripple in December 2020 because it earned $1.38 billion by offering XRP as collateral.