I’m sure you’ve all been following the Ripple vs SEC case. For those of you who haven’t, Ripple Labs ($XRP), the company responsible for developing the Ripple payment protocol, has been involved in a long and messy legal battle since Dec. 2020 with US regulators.
The SEC, or Securities and Exchange Commission, believes that Ripple sold XRP, its native token, as an unregistered security, and they have filed charges against them. Recently, however, Ripple has filed a motion to have the charges dropped.
Unfortunately for them, the SEC has just put a hurdle in their way by filing a response to Ripple’s motion to dismiss.
On April 19th, 2022, the Commission did everything that it can do to further delay the outcomes of this case by filing a joint status report at the Eastern District of Virginia to postpone the Freedom of Information Act (FOIA) litigation proceedings. Basically, the report intends to delay Ripple’s access to certain government documents which could be vital to the case and potentially lead to its dismissal.
The delay, which is an old tactic from the books to buy some time to bring something practical to the table, follows Judge Sarah Netburn’s April 11 decision that denied the SEC’s motion for partial reconsideration of its order- legally forcing the US regulator to produce documents and emails related to a June 14, 2018 speech made by former SEC director William Hinman. In the speech the former SEC official stated that he didn’t consider Ethereum (ETH) to be a security.
Following the speech, the SEC argued that these were Hinman’s personal views on crypto rather than the regulator’s policy reflections. Hinman left the agency shortly after that speech.
Interestingly, Hinman is accused of improprieties and conflict of interest by the Commission’s ethics office. The allegations against the Silicon Valley deals lawyer stem from his involvement with a company called Simpson Thacher, which is a US-based law firm that sits on the Enterprise Ethereum Alliance, representing Ether’s (ETH) related financial interests. Hinman held a major post at Simpson Thacher prior to being appointed to the SEC.
Ripple is hoping that the production of all emails and drafts related to Hinman’s speech on the SEC’s privilege log would show that the Commission’s ethics office had warned Hinman of a direct financial interest in Simpson Thacher.
This is a major coup for Ripple, as it provides strong evidence that Hinman was not impartial when it came to XRP having a similar regulatory status as Ether and Bitcoin (BTC). Also, last year Bloomberg reported that Hinman received more than $15 million in payments from his old law firm during his four years at the SEC.
The SEC has been investigating Ripple for over two years now, and the company is yet to be charged with any wrongdoing. Despite this, Ripple is forging ahead with new partnerships and developments.
The SEC’s latest filing should not be seen as a roadblock for the company, but rather as another challenge to overcome on the way to global domination of the payments industry. Only time will tell if Ripple can continue its impressive growth in the face of increasing scrutiny from financial regulators.
As of press time, XRP is changing hands above $0.70, down about 0.90% intraday. The $34 billion market cap altcoin, whose market dominance remains at 1.85%, traded in a range of $0.7028 – $0.7155 indicating low volatility over the last 24 hours.