Key Takeaways:
- The SEC objects to Judge Netburn's order to disclose documants relevant to the Hinman Speech.
- Why is the Speech crucial to the Ripple defense?
- Judge calls the agency "hypocritical."
YEREVAN (CoinChapter.com) – The U.S. Securities and Exchange Commission (SEC) filed an objection to overturn Judge Sarah Netburn’s Order regarding attorney-client privilege. In detail, the order related to the Hinman Speech previously cited as crucial to the case.
Why is the Hinman Speech important?
As CoinChapter reported earlier, William Hinman is the former Director of the Corporation Finance Division at the SEC. In his June 2018 speech, he voiced his position on defining digital assets.
Putting aside the fundraising that accompanied the creation of Ether, based on my understanding of the present state of Ether, the Ethereum network and its decentralized structure, current offers and sales of Ether are not securities transactions.
said the former official.
Ripple’s defense team cited the abovesaid speech as an example of SEC’s bias against the XRP token. They claimed that if Ether (ETH) is not a security, Ripple’s token shouldn’t be considered one.
Previously, the defense lawyers pointed out that third-party experts fall under a “non-privileged area of inquiry.” Thus, deposing Hinman could help voice his personal opinion and the ‘army of experts’ that he consulted.
Also read: SEC vs Ripple: Judge orders U.S. regulator to disclose shielded opinions on crypto.
SEC doesn’t have a leg to stand on the matter
In arguing the case, the SEC initially stated Hinman’s speech was his “personal opinion” and not reflective of the Commission’s stance.
However, the law enforcement agency quickly changed its tune once the Judge ordered the SEC to disclose the related documents.
The agency then claimed the speech and its corresponding drafts were not merely Hinman’s opinion but the opinion of the Division of Corporation Finance, so they were covered by attorney-client privilege and should remain confidential.
Also read: Could Ripple (XRP) be classified as security — realistically?
Moreover, the agency motioned to seal the Hinman Speech-related documents. However, after showcasing the SEC’s “obvious inconsistency” regarding Ethereum definition, the Judge ruled against the motion.
The latest Order Objection
Judge Netburn’s assessment of the SEC’s actions was quite harsh, calling the agency out on the “hypocrisy.” Magistrate Judge noted that the SEC argued two opposing positions simultaneously. On the one hand, the agency claimed the “speech is not relevant to the market’s understanding of how or whether the SEC will regulate cryptocurrency.”
On the other hand, the prosecution argued that “Hinman sought and obtained legal advice from SEC counsel in drafting his speech.”
The hypocrisy suggests that the SEC is adopting its litigation positions to further its desired goal and not out of a faithful allegiance to the law.
concluded the Judge.
Also read: Chinese economy is sitting on a ticking debt bomb.
On July 22, the SEC filed an objection to the ruling. Jeremy Hogan, an attorney who provided his legal opinion on the case, said that “someone needs to talk [the SEC] off the ledge.”
