Richter allows Ripple to oust SEC officials who have ruled ETH is not a security
San Francisco-based fintech firm Ripple has won another small victory in the ongoing battle against the US Securities and Exchange Commission.
District Court Justice Sarah Netburn denied the SEC’s motion to block the removal of former director of the SEC’s Corporate Finance Division, William Hinman, in a ruling in New York on Thursday.
In June 2018, Hinman said in a speech based on his understanding of the Ethereum network and its decentralized structure, “current Ether offers and sales are not securities transactions.”
The delisting could add weight to Ripple’s claim that the XRP token is not a security. Without an appeal from the SEC, Ripple could ask Hinman to testify about the reasons for his decision about ETH at the time and then try to apply this reasoning to XRP.
Ripple has argued that the SEC cannot regulate XRP as a security because it is a medium of exchange for international and domestic transactions.
According to Bloomberg, the SEC contested the subpoena, stating that the interrogation “will subject senior government officials to filings regarding any law, regulation, or policy they have consulted or developed.” and then take enforcement action.
The Financial Regulator also argued that it was not speaking through individual employees or agents, but only through enforcement action, so anything Hinman ever said was considered “intentional”. The SEC informed the judge that the alleged due process, also known as “Exception 5,” would be exercised if Hinman were removed from office.
Judge Netburn stated that this was not a “serious SEC enforcement case” and added that Hinman’s testimony would not “open the floodgates”. She went on to say that the case “involves major policy decisions in our market, the controversies are substantial and the public interest in this case is substantial”.
Connected: Is XRP a Security? We may never know
In December 2020, the SEC filed a lawsuit against Ripple alleging that the company, CEO Brad Garlinghouse and co-founder Chris Larsen, was making a “continuous, unregistered offering of securities for digital assets” with its XRP token sale have.
In late June, the SEC accused Ripple fans, also known as the “XRP Army”, of making “false statements” against their leadership on social media. The regulator asked the conference to consider the rejection of a petition from Ripple to the Hinman subpoena claiming it would prioritize “a parade calling for the testimony of senior government officials” and interfere in government affairs.
In a November 2020 speech just before Hinman left the agency, he cited the SEC’s filing as a door opener for technologies like cryptocurrencies and blockchain without revising the current regulatory framework.