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

Uncategorized

Moscow Exchange reports $350 billion in November FX volumes

FX trading volumes continued its upward momentum at Moscow Exchange (MOEX) during November, buoyed by a steady rise in volatility coupled with a multi-year effort to bring new business to the platform.

Retail FX

Interactive Brokers’ volumes continue growth trajectory in November

Interactive Brokers LLC (NASDAQ:IBKR) has announced higher trading volumes in November, dwarfing the metrics for October and the same period last year by 20 percent.

Retail FX

Exness trading volume hits record highs for second consecutive ‎month

FX broker Exness’ trading volumes have breached new highs in November, building on the record-breaking turnover streak from the beginning of the fourth quarter. That has been aided by the economic impact from the Covid-19 developments and inflation concerns that apparently sent investors hunting for FX instruments to limit their risk exposure.

Institutional FX

Hedge-fund legend Steven Cohen invests in Dmitri Galinov’s 24 Exchange

24 Exchange, the OTC platform backed by Fastmatch founder Dmitri Galinov, has completed a fresh fundraising round of $14.25 million at an undisclosed valuation. The recent capital injection was led by Point72 Ventures, the venture capital firm of the hedge fund titan Steven Cohen.

Digital Assets

Can Coinbase make or break XRP? – (Congress, XRP rating, JP Morgan)

According to Coinbase’s Council, XRP has the highest rating among 28 cryptos – meaning it is the closest you can get to a security: 4 out of 5.

Digital Assets

Polygon (MATIC) delves deeper into blockchain gaming by partnering with GameOn

Polygon, the Layer 2 scaling solution for Ethereum, has announced a partnership with GameOn Entertainment to build new and different types of NFT games on the network as it seeks to expand into the blockchain gaming and NFT space in a major way.

Retail FX

David Beckham to promote GemForex across Asia

GemForex makes efforts to lead in trading conditions, execution times, safety of client funds and data security, according to the FX and CFD broker holding a Mauritius Financial License.

Retail FX

InstaForex extends sponsorship deal with Borussia Dortmund after German Cup win

InstaForex provides access to trading of forex, CFDs, stocks, futures, options, and cryptocurrencies as the FX industry goes multi asset to address the needs of an increasingly demanding client base. 

Digital Assets

Treasury Secretary Yellen still cant decide on digital dollar

Treasury Secretary of the US, Janet Yellen, has said that she still is not sure whether the US should go ahead and have the digital dollar and follow the example of other major countries including China and India in introducing the same.

<