Attorney John E. Deaton predicted that the emails and papers used to compose Bill Hinman’s contentious 2018 speech at the Yahoo Finance All Markets Summit, often known as the Hinman documents, would eventually be made available to the public.
The lawyer claimed these documents would be public regardless of the judge’s SEC v. Ripple lawsuit ruling.
As stated by the founder of CryptoLaw in a Twitter thread yesterday, Judge Analisa Torres is likely to declare the documents “judicial documents.”
This will make them publicly accessible with some redactions if she uses them as evidence in her summary judgment ruling in the United States Securities and Exchange Commission (SEC) case against Ripple.
Most importantly, Deaton thinks these records will still be made public even if this doesn’t happen.
According to Deaton’s interpretation of the initial portion of the Twitter conversation, the emails and speech drafts will likely be made public at some point, regardless of Judge Torres’ choice to seal them.
Recall that the SEC has requested to seal the papers in omnibus motions.
Hinman Documents Critical to Ongoing Lawsuit
According to Deaton, the SEC will pursue additional crypto enforcement proceedings where these materials may help defend against claims, notably those made against crypto exchanges.
The lawyer had said in July that the SEC would eventually pursue a cryptocurrency exchange, and the attorney still holds this stance.
The attorney uses reports of many subpoenas and notifications issued to cryptocurrency projects and businesses as red flags.
Eleanor Terrett of FOX Business said he also reaffirmed the agency’s commitment to crypto enforcement in its budget proposal.
He also cites the action against Dragonchain over DRGN, a token on the Ethereum blockchain that the SEC similarly claims to be unregistered securities, as an example of how crucial the Hinman documents are to ongoing litigation.
The attorney reminds the audience that judges have already rejected attorney-client privilege claims from the SEC and argues that, in this case, access to the Hinman documents is more crucial to the defense than Ripple’s fair notice defense.
The then-director of the SEC’s Division of Corporate Finance, Hinman, asserted in the controversial speech that ETH is not a security since the blockchain is sufficiently decentralized. The blockchain that DRGN uses is the one that was just mentioned.
Deaton also emphasized that Dr. Roslyn Layton, a policy analyst, had submitted a motion in the Ripple case objecting to the SEC’s attempt to seal the records.
Deaton also asserts that he has submitted a comparable request under the Freedom of Information Act, which he intends to pursue.
“The truth will see daylight,” Deaton asserted.
The SEC’s Enforcement Action
Notwithstanding Ethereum’s 2014 Initial Coin Offering, Hinman had claimed that cryptocurrencies on sufficiently decentralized blockchains are not securities. He particularly cited Bitcoin and Ethereum as instances.
Therefore it shocked many in the cryptocurrency industry two years later when the SEC took enforcement action against Ripple over XRP, prompting the Ripple defense to ask for documents about the speech draft.
In particular, it makes one wonder why the agency targeted Ripple instead of Ethereum.
Remember that the SEC first opposed Ripple’s request, claiming that the speech was merely Hinman’s viewpoint and unrelated.
Nevertheless, when the judge pressed the agency for the documents, the agency changed its story, claiming that Hinman had written the speech with the assistance of the agency’s attorneys and so enjoying the privilege of attorney-client relations.
However, the SEC gave the documents to Ripple in October after 18 months and six court orders from two courts.
The documents would reveal if there were evil intentions behind the Ethereum free pass or uncertainty among regulators, which would justify perplexity among market players, as Dr. Layton noted after filing her application to obtain access to the materials.
As the blockchain payments business acknowledged receipt of the hotly debated documents, Ripple CEO Brad Garlinghouse tweeted.
“The SEC wants you to think it cares about disclosure, transparency, and clarity. Don’t believe them. When the truth eventually comes out, the shamefulness of their behavior here will shock you.”
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