SEC Under Pressure to Release Hinman Speech Draft or Settle with Ripple
The Securities and Exchange Commission is two days from a key legal deadline in their suit against Ripple. Last week Judge Analisa Torres ordered the SEC to produce internal documents and notes relating to public statements made by former SEC Director William Hinman. The SEC flat-out doesn’t want to. Legal observers suggest the SEC faces potential embarassment if the documents are made public. Possibly, this is because the internal communications will show Hinman had a conflict of interest.
There are several routes the SEC could take to stall the surrendering of the documents to Ripple. These include filing a motion asking Judge Torres to reconsider her decision, requesting that she certifies an appeal of her decision, or approaching the Court of Appeal for a Writ of Mandamus.
As of today, the SEC has yet to make any move.
It is unclear what decision the SEC will make now, but many people believe the agency will do everything to ensure it does not surrender the documents to Ripple. According to attorney John Deaton, the founder of Crypto Law, the SEC would rather enter into a settlement with Ripple than surrender the Hinman notes.
Aside from Ripple-related issues, many believe the Hinman documents could reveal the SEC’s internal opinion about cryptocurrency regulations, which could have more severe consequences.
Fox Business reporter Eleanor Terrett also reported that Hinman was crucial in getting the SEC to bring action against Ripple, against the opinion of others in the agency.
According to Terret, when Ripple was initially alleged to have violated U.S. securities laws, Jay Clayton, the former SEC chair, had wanted a settlement between the blockchain company and the agency. However, Hinman would not have any of it, as he pushed the SEC to file a lawsuit against Ripple for allegedly violating U.S. securities laws via its 2013 Initial Coin Offering (ICO).
“I heard that when the Ripple case was brought in December 2020, Jay Clayton had been in favor of settling [with Ripple] pretty much right off the bat, but Bill Hinman had been driving home saying no we have to continue with this case. I heard Clayton was in favor of settling, Hinman was not,” Terret was quoted as saying.
Hinman’s history is a problem for the SEC. Hinman is accused of having interest in Ethereum, a competitor for Ripple, even as he was working for the SEC as a top crypto regulator. Before joining the SEC, he was a partner in a law firm that was a member of the Enterprise Ethereum Alliance, and which paid him $9 million in profit and retirement earnings after he left the SEC.
From its earliest actions, the SEC has had serious challenges to its role in regulating crypto, and we believe it falls on Congress to establish a new, forward looking framework that would provide clarity to the industry as well as the freedom necessary for the pace of innovation and change in Blockchain enterprises.