The judge in charge of the Ripple case points out inconsistencies in SEC arguments.
Judge Sarah Netburn, Magistrate in the Southern District of New York, has called out the SEC for its shifty stance on the controversial William Hinman speech, which has become central to the SEC vs. Ripple case.
“The hypocrisy in arguing to the court, on the one hand, that the speech is not relevant to the market’s understanding of how or whether the SEC will regulate cryptocurrency and, on the other hand, that Hinman sought and obtained legal advice from SEC counsel in drafting his speech, suggests that the SEC is adopting its litigation positions to further its desired goal and not out of a faithful allegiance to the law,” Netburn said according to a Fox Business report.
It is worth noting that the speech in question given by Hinman in 2018, in his capacity as Director of the Division of Corporation Finance, proclaims that Bitcoin and Ethereum are not securities.
The speech has become critical to the case as Ripple argues that if the speech by Hinman represents the views of the SEC, then the same body could not classify XRP as a security as it shares many similarities in its launch with Ethereum.
Notably, Ripple, in December 2020, had been slapped with a lawsuit by the US SEC for allegedly selling unregistered securities – XRP tokens – to provide capital for its business and enrich executives.
As Netburn points out, the SEC had previously argued that the controversial speech represented Hinman’s personal opinions and not that of the regulator, as corroborated by a signed affidavit by Hinman himself in a Ripple deposition in 2021. However, the SEC quickly revised this stance when Netburn requested documents related to the creation of the speech.
The SEC now claims that the speech represented the view of Hinman’s erstwhile division and was drafted in tandem with SEC legal counsel. Consequently, the regulator argues that the documents are protected by the attorney-client privilege.
The apparent inconsistency in the SEC’s argument no doubt annoyed the Judge. Consequently, on Tuesday, as reported by The Crypto Basic, Netburn ruled to deny the SEC’s push for attorney-client privilege and requested that all relevant documents be submitted to the court.
It is worth noting that a win for the SEC could see the regulator have precedence to gain extensive supervision over the crypto markets. However, in the same vein, losing the case could jeopardize its goal of becoming the market’s primary regulator.