In a shocking turn of events, U.S. District Court Judge Analisa Torres rejected the SEC’s second appeal to withhold related documents affiliated with former Division Director William Hinman, who stated that Bitcoin and Ether are not securities. This sent excitement within the Ripple community after Ripple Labs won a legal battle with the United States Securities and Exchange Commission (SEC). It was possible because the judge permitted the documents written by former SEC Corporation Finance Division Director William Hinman to be released.
What Was In The Documents Ripple Labs Wanted Released?
The records mostly contained Hinman’s past speech at the Yahoo Finance All Markets Summit in June 2018.
“Ether (ETH) was not a security,” Hinman said in his speech. Ripple Labs views the speech as critical evidence in the SEC case claiming that Ripple’s XRP sales infringed US securities laws.
However, the SEC is yet to determine whether the information said in the speech is as important as Ripple Labs suggests. The details surrounding the speech and Hinman’s actions before presenting it have caused immense confusion to the involved parties.
District Court Judge Sarah Netburn’s decision proclaiming that the deliberative process did not secure the emails and drafts of Hinman’s speech prompted Judge Torres’ to overrule the SEC’s protests to release the said documents.
The SEC then asserted attorney-client privilege to gain ownership of the documents, which Netburn also rejected in July.
Judge Netburn’s continuous rejection didn’t stop the SEC from filing a lawsuit against Ripple Labs and its current CEO, Brad Garlinghouse, and previous CEO, Chris Larsen.
SEC Claims XRP Is A Security Not A Commodity
In December 2020, the SEC claimed that the company’s cryptocurrency, XRP, is indeed security rather than a commodity. They further alleged that by selling the token, the blockchain company raised $1.8 billion illegally.
It ended up being one of the most severe disputes between a cryptocurrency company and government authorities. The Ripple Labs case is one of the few examples of an SEC action going to trial, which could result in a precedent-setting ruling rather than a settlement.
The case was initially viewed as unfavorable for Ripple Labs, causing the company to take extra measures and pursue various defense strategies. However, in light of the recent developments, one of the company’s lawyers, James Filan, claims that “this is a big win for Ripple.”
On September 17, Ripple Labs and the SEC submitted motions for summary judgment in the U.S. Southern District of New York District Court.