Declassified Emails Reveal SEC's Stance on Bitcoin and Ethereum, but Offer No New Insights on XRP Lawsuit
The newly declassified speech by former SEC official William Hinman confirms that Bitcoin and Ethereum are not considered securities but provides no additional information about Ripple’s XRP.
Declassified Emails Provide No New Information on XRP Lawsuit
On June 13, the U.S. Securities and Exchange Commission (SEC), under court order, released emails from former SEC Director William Hinman regarding the ongoing lawsuit with Ripple, the issuer of XRP.
This release was highly anticipated by the XRP community and those following the SEC-Ripple case since 2020, as it was expected to contain evidence of the SEC’s initial stance on the legal status of cryptocurrencies, potentially shifting the balance in favor of Ripple.
Full document 👇🏼https://t.co/AWFED2zUmo?
— Eleanor Terrett (@EleanorTerrett) June 13, 2023
However, the declassified documents did not provide such information. The emails were actually drafts of a 2018 speech on how to classify securities for blockchain projects with their own tokens.
In the speech, Hinman discussed applying the Howey Test to crypto projects to determine whether a token was created for practical utility within a blockchain technology or purely for investment purposes, which would then lead to a securities classification.
The only confirmation Hinman provided was that Bitcoin and Ethereum, according to him, were not securities. Hinman even suggested a meeting with Ethereum founder Vitalik Buterin to better understand the blockchain model.
6/Head of Trading and Markets (T&M) said, “because the list of factors is so extensive – and appears to include things that go beyond the typical Howey analysis – we have concerns this might lead to greater confusion on what is a security.” Hinman ignored those concerns. pic.twitter.com/2xTzKGHITj
— Stuart Alderoty (@s_alderoty) June 13, 2023
Nonetheless, some SEC members criticized Hinman for his firm stance on Bitcoin and Ethereum, noting that it had not been fully endorsed by the SEC and could complicate future decisions. Additionally, Hinman’s application of the Howey Test in the speech was considered broader than usual, potentially leading to misunderstandings about securities classification.
Ripple's General Counsel, Stuart Alderoty, has called for an investigation into Hinman to clarify why his statements seemed "favorable to Bitcoin and Ethereum," despite comments from other SEC staff. The SEC had previously cited this speech to assess whether a cryptocurrency might be classified as a security.
@bgarlinghouse, any thoughts ahead of the "Hinman doc" release?
— Jungle Inc: Deaton 4 Senate (@jungleincxrp) June 12, 2023
We are all appreciate of Ripple fighting for this important public disclosure.
In 2020, the SEC sued Ripple, accusing it of conducting an illegal XRP securities offering, raising $1.3 billion. The legal battle is ongoing, with no resolution in sight.
Ripple has sought the declassification of Hinman's emails since 2021, arguing that they contain evidence proving XRP is not a security.
Ripple CEO Brad Garlinghouse claimed on June 13 that the released documents "are worth the wait."
XRP’s price saw a brief uptick following the release of Hinman’s emails and speech but has since returned to previous levels.
15-minute chart of the XRP/USDT pair as of 09:40 PM on June 13, 2023
As reported by Coin68, the SEC has intensified its crackdown on the crypto sector in 2023, with recent lawsuits against Binance and Coinbase, and allegations that many of their listed tokens are securities.
Current SEC Chair Gary Gensler has previously stated that only Bitcoin is considered not a security, while other cases, including Proof-of-Stake projects like Ethereum, could still be classified as securities.
