A federal judge in Manhattan has accused Top Wall Street’s “hypocrisy” of the tactics of the proceedings, known as the cryptocurrency trials of this century.
The feature shows that US Magistrate Judge Sarah Netburn opposed the Securities and Exchange Commission’s allegations in a proceeding against the cross-border settlement company Ripple Labs.
The SEC has accused the crypto platform of illegally issuing XRP, an unregistered security, to build businesses and enrich corporate insiders.
The SEC seeks to retain confidential documents related to the speeches made by former SEC officials in 2018 when they tried to clarify the cryptocurrency market at the time.
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William Hinman, official corporate financial officer, said in a speech that all digital coins except Bitcoin and Ether are illegal and may be unregistered securities subject to SEC action. Insisted. Shortly thereafter, the SEC charged Ripple with the sale of unregistered XRP tokens.
In discussing the case, the SEC initially stated that Hinman’s speech was not aimed at the Commission’s market guidance, but was the opinion of an official. Later, when Judge Netburn demanded that all documents related to the production of the speech be handed over to the court, the agency changed its position regarding the nature of Hinman’s speech.
The SEC argued that the speech and its corresponding draft were not just Hinman’s, but the corporate finance department’s, so they are subject to attorney / client privileges and must be kept confidential. An evolving feature of SEC’s Hinman speech angered Netburn, who ruled that the SEC had to submit materials to court on Tuesday, rejected a request for attorney / client privileges, and anomalous agency motives. Made a strict evaluation.
“On the one hand, the speech has nothing to do with the market’s understanding of how or whether the SEC regulates cryptocurrencies, and on the other hand, Hinman obtained legal advice from SEC lawyers. False Goodness Claimed to Court In drafting his speech, it suggests that the SEC is adopting a litigation position to promote its desired goals, not from loyal loyalty to the law. ” Stated.
A SEC spokesman did not comment. Ripple had no comments. Bill Hinman did not return a request for comment.
Ripple argues that a draft of Hinman’s speech was sent to various members of the SEC for their views, and confused thoughts by the Commission, the last official act of Trump SEC Chair Jay Clayton two years later. Will show.
Gary Gensler, Biden’s successor to Clayton, continues to file proceedings, which, if successful, will have widespread regulatory impact on the $ 1 trillion crypto industry.
The SEC’s statutory authority over cryptocurrencies is ambiguous. A clear victory in the Ripple case could pave the way for further SEC enforcement. Conversely, Ripple’s victory marks a major setback in Gensler’s efforts to crack down on what he calls the “wild west” of investment.
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Ripples lawyers consider Hinman’s speeches and other drafts of related material to be important evidence that may prove that the SEC has unjustly selected them for enforcement action.
One thing is certain: the documents surrounding Hinman’s speech are important to both parties. SEC lawyers have fought to prevent Ripple from taking drafts on a privileged basis, even if they have fine-tuned the exact rationale. Personal opinions are generally not subject to such strict privilege guidelines, and during the taking of Ripple’s Hinman testimony in August 2021, he stated that the speech was entirely his own opinion. I signed the book.
Netburn’s latest ruling amends the SEC to allegations that Hinman maintains a level of confidentiality because he is not merely expressing his personal opinion but discussing it on behalf of the government. I rejected it.
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The legal dispute over the Hinman draft began in January, when Judge Netburn ordered the SEC to submit other documents to court and examined whether Ripple could access them.
The SEC is expected to appeal Judge Netburn’s decision to Judge Analisa Torres of the Federal District Court. There is a 12-day grace period before the document becomes part of the public records. When the appeal is filed and Ripple opposes her appeal, Torres makes the final decision on their release.