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The U.S. Securities and Exchange Commission (SEC) motion in which it asks the reconsideration of the unsealing of emails relating to former SEC Director of Corporate Finance William Hinman’s speech when he said that Ethereum (ETH) was not security, is a big mistake. This according to attorney and legal expert Jeremy Hogan, who has been reporting on the SEC and Ripple lawsuit from the early days on Twitter. Ripple was sued by the U.S. regulator for allegedly selling XRP as an unregistered security.
Hogan believes that the SEC is making a huge blunder by backtracking its previous argument that Hinman’s comments were his personal opinion. The regulator says:
“The speech – itself and the many drafts and comments by SEC staff across different SEC divisions and offices deliberating the agency’s approach to the regulation of digital assets – show that Director Hinman and other SEC staff used the speech to provide public guidance as to how [Hinman’s division] would apply the federal securities laws to offers and sales of digital assets including Ether.
Indeed, SEC regulations provide that Director Hinman’s public statements could be relied upon as representing the views of Corp Fin, the division he led.”
Hogan criticizes the SEC for not sticking to its strategy:
“In litigation, you have to have your strategy, your theory of the case or the theory of the issue that you are arguing, and you have to stick with it. In a DUI (driving under influence) defense case for example, your legal position may be that your guy had been drinking but was not impaired. If that is your position, you get your client straight on it, and you do not waiver. If he gets up on the stand, and says ‘Well, now that I think about it, I don’t think I drank that night,’ you are screwed.”
The SEC sued Ripple Labs in December of 2020 for allegedly issuing XRP as an unregistered security, and says it remains one to this day.
The discovery phase of the lawsuit is finally coming to an end within 10 days and Hogan believes this last-minute tweak by the SEC could potentially backfire.
“The entire argument completely backtracks on what the SEC has been saying for almost the last year. What does that mean for a legal strategy standpoint? Look at what the SEC has just done. It’s not good, because it opens up the possibility that the SEC could lose both its pawn, and its bishop.
The judge has already made a very strong determination that as far as she’s concerned, the speech was Hinman’s personal opinion. Now, in this motion for reconsideration, it has given her more very similar documents to review and changed its position on the speech 180 degrees.”