After a long saga with multiple twists, is the war between Ripple and the SEC approaching the last act? Stuart Alderoty, Ripple’s general counsel in any case, is convinced of this after the court ordered the financial market regulator to hand over the Hinman documents to him.
Ripple vs SEC: The Hinman documents, what are they?
In this legal battle against the SEC, Ripple has always maintained a firm position: the US regulator’s allegations were unfounded (and unproven). And to support its arguments, Ripple advances the position of the SEC vis-à-vis Ethereum. A detailed position in the Hinman documents. This is the draft of the speech of William Hinman (former director of the finance division within the SEC), delivered in 2018. The documents are supplemented by internal emails necessary for the trial.
In this speech, Hinman asserted that Ethereum and related cryptocurrencies are not securities. Ripple requested access to Hinman’s speech to defend against the SEC’s assertion that XRP should be treated like securities. The SEC objected to this request. US District Court Judge Sarah Netburn denied that motion in late September. It was a first victory for the accused. Eventually, the Security and Exchange Commission is forced to hand over the Hinman documents to Ripple.
Stuart Alderoty: Ripple’s lawyer confident of victory
In its legal strategy, Ripple has always portrayed the SEC complaint as arbitrary and unfair. The company points to previous rulings by regulators that Bitcoin and Ethereum are not securities. Ripple is trying to persuade the court that XRP should also be treated like BTC and ETH. The token should therefore be exempt from registration with the SEC.
Ripple’s lawyers can also use the criteria discussed internally by the SEC to make this argument. On Twitter, Stuart Alderoty expresses himself with great satisfaction: “Although they remain confidential for now (at the insistence of the SEC), I can say that it was well worth the fight to obtain them. […] I have always been satisfied with our legal arguments, and I feel even better now. I’ve always felt bad about SEC tactics, and I feel even worse about them now.”
Towards the end of an endless legal war?
If the DRY wins the case, XRP will be considered a security rather than a virtual currency. But in view of the last two court decisions in favor of Ripple, the latter could well obtain legal action. Moreover, Stuart Alderoty is confident about this outcome, pointing out the weakness of the SEC’s arguments. He declares : “After two years of litigation, the SEC is unable to identify an investment contract and cannot satisfy a single part of the Supreme Court’s Howey test”.
According to Brad Garlinghouse, CEO of Ripple, the SEC simply wants “extend their jurisdiction far beyond the authority granted to them by Congress”. An attitude that he describes as inadmissible. The crypto community is eagerly awaiting the end of this legal war and hoping for a victory for XRP. Such a victory would be considered a huge win for crypto.
This latest court ruling is a victory for Ripple. It is, however, a relatively minor procedure in a much larger case. The outcome is far from certain, but it seems that the market sentiment is leaning towards Ripple.
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