Table of Contents
Key Points
- Ripple vs. SEC case has been going on for the last 18+ months over claims that XRP is a security
- EX SEC Director William Hinman made a speech in 2018 claiming that some assets like BTC and ETH start as securities, but they evolve into commodities
- SEC has been trying to keep the documents sealed, but Judge Torres denied their motion on May 16, 2023
- The documents were released on June 13, 2023, for public access
Ripple vs. SEC: Hinmans documents
Hinmans documents are internal SEC messages concerning a speech given by former director William Hinman detailing that some crypto assets evolve from being securities. Hinman said that some assets become commodities as soon as decentralization disqualifies them as securities.
The SEC has been working to keep these documents hidden from the public as it continues to crack down n crypto platforms for trading ‘securities.’ In the case against Ripple, Judge Torres denied their motion to hide the Hinmans documents in May 2023, saying that the public has the right to know what transpired.
What should you expect from Hinmans documents?
We expect to see emails and comments made by Hinman, SEC staff, and Valerie Szczepanik concerning his speech on crypto assets evolving their asset classes as decentralization sets in. You can expect to see drafts and quotes from his speech in the documents. The documents are expected to bear minimal redactions.
Will the documents refer directly to the XRP token?
Though Ripple CEO Brad Garlinghouse says these documents are worth the wait, they are not certain to have XRP token mentions. However, as the SEC was investigating XRP, which at the time was among the top 3 coins in the world, it is possible that it mentioned or, rather, SEC incriminated itself in the process of handling the token.
Why are the Hinmans documents important to the crypto industry?
The crypto industry has been under a regulation attack by the U.S. SEC, with over 67 assets accredited as Securities. Most of these ‘securities’ are highly decentralized, which will most likely disrupt what the SEC is doing currently and may result in a major shift of their regulator power over the crypto industry.
If these assets are reclassified as commodities, the SEC will be in for a wild ride as the legal status of cryptos changes, and they have been knowing it for a long time but ignoring it and going ahead to charge trading platforms in the U.S. The legal proceedings with Riplle may also shift greatly.
What is the likely impact of Hinmans documents on the Ripple vs. SEC case?
Once the Hinman documents are released, Ripple will have a 25% outright chance of winning the case as they lean heavily in their favor. On the other hand, the SEC will have around a 5% outright chance of winning the case.
These documents are important to this case as they will influence the decisions and efforts made by the SEC to regulate Ripple and other future cryptocurrency-related investments. The documents may bear comments that suggest that XRP Ripple does not satisfy all elements of the Howie Test, making it not a security for purposes of the Federal Securities Laws.
Keep watching Fintech Express for updates on this and other fintech-related developments.