The identity of the SEC official that Ripple wants to depose has finally been revealed – it’s former director William Hinman.
Hinman famously declared that Ethereum and Bitcoin were not securities, but the SEC is arguing that this was his personal opinion and not the regulator’s stand.
Ripple Labs and the U.S Securities and Exchange Commission have been going back and forth in court over the deposition of a former SEC official. While there has been speculation that the official might be former chair Jay Clayton, no one knew who it was for certain. That is until now. In new court filings, the watchdog has revealed that the official is the former director of corporate finance, William Hinman. Hinman famously declared that Bitcoin and Ether are not securities, and this has become a critical point of contention in the Ripple vs. SEC case.
Ripple filed a motion seeking the court’s approval to subpoena the former director for a deposition weeks ago. Since then, the regulator has been fighting the move. As CNF reported Thursday, the SEC was fully aware that the deposition could have significant ramifications in its case.
And now, the SEC has filed a motion to quash the deposition of Hinman by Ripple.
— James K. Filan (@FilanLaw) June 24, 2021
The motion, filed at the Southern District of New York, states:
In the alternative, the SEC seeks an orderquashingtheSubpoena without prejudice until after Judge Torres’sruling on the SEC’s motion to strike Ripple’s fair notice defense.
The regulator argues against why the judge should quash the subpoena in its comprehensive motion. One of the reasons is that questioning former public servants years after leaving office will deter qualified candidates from joining the public service.
“Hinman expressed his personal views, not the SEC’s”
With Hinman, it all boils down to the statement he made that Bitcoin and Ethereum were not securities. In June 2018, during the Yahoo All Markets Summit, Hinman singled out the two top cryptos as not being securities. Many understood this to be the SEC’s stand. After all, aside from chairman Clayton and the five commissioners, directors at the SEC are the highest-ranking officials. Even the SEC admits that Hinman was very high-ranking, stating:
Between 2017 and 2020, Director Hinman served as one of the SEC’s highest-ranking officials. Other than the five Commissioners themselves, no SEC officers have more significant responsibilities or a higher rank than the directors of the SEC’s six divisions.
However, despite his high rank, Hinman wasn’t speaking for the regulator on that specific day. Rather, he was expressing a personal opinion, the SEC claims.
Although Director Hinman did not make any public statements about XRP during his tenure as Division Director, he did make a public speech on June 14, 2018, in which he expressed his own view that the offers and sales of the digital asset Ether at that time were “not securities transactions,” based on his understanding of the specific facts and circumstances of Ether and the structure of the Ethereum blockchain at the time.
The SEC further clarified that at no time did Hinman mention, or make reference to XRP.
However, as attorney Filan observes, this speech has been used by former chair Clayton as an example of just how transparent the SEC has been on digital assets.
3/3 Clayton used Hinman’s speech as an example of how transparent the SEC has been in its treatment of digital assets but now Hinman is tap-dancing in that declaration. See Clayton letter to Rep Budd: https://t.co/5EPcBw8i0D
— James K. Filan (@FilanLaw) June 25, 2021
As CNF reported Thursday, Hinman recently joined Andreessen Horowitz as an advisory partner for its crypto fund, which is the largest ever.
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