Ripple: Who is the ex-SEC Director whose deposition the SEC wants to quash?

Rick Steves

Mr. Hinman was the one that ruled that Bitcoin and Ethereum are not securities, despite the latter debuting in an initial coin offering (ICO) in 2014.

William H. Hinman

The Securities and Exchange Commission has filed today a motion to quash Ripple’s deposition subpoena directed to William H. Hinman, former Director of the SEC’s Division of Corporate Finance.

The SEC argues that the defendants bear the burden of showing “exceptional circumstances” justifying the deposition and stated that Ripple Labs and its co-founders “cannot meet this high burden.”

According to the motion, the defendants want Mr. Hinman’s testimony on the SEC’s internal views and policy decision-making.

To argue against the deposition, the regulator stated that Mr. Himan was of critical importance to the SEC’s operations, has no first-hand knowledge of the facts underlying this action, and defendants cannot meet the burden of “exceptional circumstances.

Who is William H. Hinman?

Calling the former SEC Director of Corporate Finance to the stand may be part of Ripple’s move to turn the lawsuit against the Securities and Exchange Commission.

Mr. Hinman was the one that ruled that Bitcoin and Ethereum are not securities, despite the latter debuting in an initial coin offering (ICO) in 2014. With XRP they said its status had “not been determined.”

When Ripple requested the internal documentation to explain how and why the SEC made its decisions, the regulator said that nothing Clayton and Hinman (as well as any SEC official) said about bitcoin or ether was an “official determination” on whether they are securities.

Now there might be a conflict of interest in play as Hinman left the SEC and returned to Simpson Thatcher, which paid him a $1.6 million annual pension. The law firm is connected to the Ethereum Enterprise Alliance.

It appears that XRP doesn’t have to be a security to get sued by the SEC

SEC Commissioner Hester Peirce, also known as “crypto mom”, has recently stated that the SEC should focus more on regulatory clarity and less on enforcement at the present time.

Ms. Peirce told Bloomberg TV what is the SEC’s intention when filing a complaint against a firm for an unregistered securities offering.

“When we think about a cryptoasset as being a security what we’re doing is we’re saying it’s being sold as part of an investment contract. It doesn’t mean that the asset itself necessarily has to be a security. It means that it was being sold as a security.”

This could relate to XRP as well, although she is not commenting on ongoing SEC litigation.

The SEC complaint, filed on 22 December 2020, doesn’t seem to mention that broader view. This is how the first paragraph goes:

“The Securities and Exchange Commission announced today that it has filed an action against Ripple Labs Inc. and two of its executives, who are also significant security holders, alleging that they raised over $1.3 billion through an unregistered, ongoing digital asset securities offering.”

Throughout the lawsuit, the regulator has claimed that Ripple’s XRP is a security due to its centralized nature and so, it falls under its regulatory scope.

Ripple says it never held an ICO nor its digital asset can be defined as a security since its utility is proven every day across the globe as it is used for cross-border payments.

Read this next

Retail FX

Libertex bags multi-year sponsorship deal with FC Bayern

Indication Investments Ltd, the operator of FX retail brand Libertex, has secured a lucrative sponsorship deal with German soccer giant FC Bayern.

Institutional FX

PrimeXM reports lower volumes for July as summer lull bites

PrimeXM has reported weaker trading volumes for July 2022, in line with other institutional and retail platforms that saw the activity of their clients dropped compared to a month earlier.

Retail FX

FCA warns of ATFX Global Trading / ATFXcoin

In its latest clampdown against the specific type of ‘clone fraud’, the Financial Conduct Authority (FCA) has warned local investors to watch out for a company called ATFX Global Trading / ATFXcoin.

Digital Assets

CME Group to roll out options on Ether futures next month

Derivatives exchange CME Group is set to roll out options on Ether futures on September 12 in a move to bring another level of diversification to cryptocurrency traders.

Industry News, Podcasts

Finance Feeds launches Podcasts: Listen to Ep. #1 feat. Dmitri Galinov of 24 Exchange

The team at Finance Feeds are happy to announce the launch of our Podcast series, available on Spotify and other audio services and hosted by our Editor-in-Chief Nikolai Isayev.

Digital Assets

Madfish launches Yupana.Finance, the first lending protocol on Tezos

Yupana, which aims to provide a similar experience to Aave or Compound, currently supports TEZ, cTEZ, kUSD, tzBTC, uUSD, and uBTC.

Industry News

SEC charges barred broker Anthony J. Mastroianni with $1.2m fraud targeting elderly

Instead of using investor monies to generate income, Mastroianni withdrew over $486,000 of investors’ money from his firm’s bank account and used ill-gotten funds for personal expenses on luxury items, the SEC alleged. 

Digital Assets

Unizen names crypto veteran Michael Healy as chief strategy officer

CeDeFi exchange Unizen has onboarded crypto industry veteran Michael Healy, who originally worked for Wikileaks and built their android application in 2010, as Chief Strategy Officer.

Institutional FX

Sterling Trading Tech adds FX and Crypto to risk and margin system

The Risk-as-a-Service solution provides supports FX spot, forward, and swap trades and positions, in any currency pair, as well as Crypto including crypto priced in any currency.

<