Ripple has won a ruling that forces the US Securities and Exchange Commission (SEC) to release emails about a speech in which a former official reportedly concluded that Ethereum (ETH) is not a security.
Important win for Ripple
Ripple has won a major procedural victory in its battle with the SEC. A federal judge ruled on Thursday. The judge has ruled that the agency cannot claim that emails related to a landmark 2018 speech about Ethereum are privileged documents.
The speech in question was delivered by a former top SEC official, William Hinman. He told an audience that Ethereum was not a security because it was sufficiently decentralized. That speech is also central to the lawsuit in which the SEC alleges that Ripple and its top executives knew that the blockchain’s digital currency, XRP, was a security that had to be registered with the agency. Yet it was sold to the public.
As part of its legal strategy, Ripple has sought to obtain evidence on how Hinman decided Ethereum was not a security. This evidence could help the company refute the SEC’s claims about the nature of XRP.
Thursday is a larger batch of documents. For example, notes from SEC crypto expert Valerie Szczepanik are discussed. The notes contain various SEC deliberations. Also included are emails in which Hinman and others discussed a draft of the Ethereum speech.
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Tough approach from the SEC
The SEC had argued that the documents fell under its so-called “privilege.” Privilege is a legal term that means that a party does not have to share it with its opponent in a lawsuit. The SEC invoked attorney-client privilege and other privileges designed to shield government agencies in certain situations.
US Magistrate Judge Sarah Netburn agreed with the SEC on certain documents. However, she rejected the agency’s argument for more than a dozen batches of other documents. In the case of the emails about Hinman’s speech, Netburn concluded that the privilege did not apply because the speech was his personal views, not those of the agency. Here’s the most important part of the decision:
Hinman and the SEC admit agency employees discussed his speech. But it turns out that this speech was ‘only incidental to the actual policy making’, (Tigue, 312 F.3d at 80). Thus, there was no “essential link” in the SEC’s Ether consultation process (Grand Cent. P’ship, 166 F.3d at 482). As a result, emails about the speech or drafts do not have documents from agencies that precede the decision. Nor are there any deliberative documents that are entitled to protection.”
Netburn’s decision will give Ripple new ammunition to use in its legal opposition. The decision will also benefit public opinion. Here, many are of the opinion that in the crypto industry, the SEC has unfairly cracked down on the company. Nevertheless, the ruling is only a procedural one. It has little bearing on the larger issue in the case. This issue revolves around whether XRP is a security or not.