SEC Forced To Hand Over Hinman Documents To Ripple — Crypto Future Still Hangs In Balance

As part of Ripple’s ongoing 2-year legal battle with the US’s Security and Exchange Commission (SEC) – which began back in 2020 when the blockchain was sued for violating security laws through the ‘unregistered sale’ of $1.3 billions worth of $XRP tokens – a district judge has overruled the SEC’s attempts to prevent providing the blockchain with access to internal emails which discuss the regulatory status of Ethereum.

The emails in question are from 2018, and include a speech from former SEC Division Director William Hinman which stated that Ethereum isn’t a security because it was ‘sufficiently decentralized’. As those who are up to date with the regulatory pressures surrounding crypto will already know, such idea goes against Gary Gensler’s (the SEC’s current chairman) concern that Ethereum should be viewed as a security, especially in wake of the ‘Merge’.

In coming to realize that a SEC-related figure perceives Ethereum as a non-security, Ripple essentially believes that its own token, as well as many others, follow a similar dynamic, therefore meaning their tokens follow the same precedent. Through this logic, this also means that the sale of its token shouldn’t violate US security laws either, therefore meaning that the SEC’s attempt to sue the blockchain should be dismissed.

Not only do Ripple intend to use the emails in order to achieve such consensus, but they also hope they will help shed light on how the SEC is trying to ‘pick two winners’ in the crypto space- Ethereum and Bitcoin that is – whilst shunning the rest. Evidence which has arisen in the midst of the case, such as information which bolster arguments for the SEC giving a free pass to Ethereum, as well as ‘institutionalized insider trading,’ may also come into play here.

Despite the emails being given the go-ahead to enter legal proceedings, the reason behind the ruling has caused experts to remain skeptical as to how they will actually be of benefit to Ripple’s case. This is because, as per the language of the judgment, ‘at most’ they’ll reveal Hinman’s personal opinion on the matter, and further, they don’t actually relate to “some form of agency, position, decisions, or policy”.

With this in mind, and despite being a small win crypto’s attempt to combat the ongoing onslaught of government regulation, it’s still unclear as to how much weight the emails will have in the final ruling.

Overall, the case is rare in the fact that it involves a SEC action going to trial, thus meaning that a precedent decision may be made as opposed to a settlement.  Consequently, its final ruling could have a huge impact on the futures of many cryptocurrencies, as a win for Ripple could dampen the SEC’s ‘regulation by enforcement’ strategy, however a win for the SEC could see the regulatory floodgates begin to open.