At a recent hearing, District Judge Sarah Netburn appointed William Hinman, former director of corporate finance at the US Securities and Exchange Commission.
Judge Netburn Claims the Testimony Will Not Affect Other Departments
As reported by Fxcryptonews, the SEC believes the approval of Hinman’s testimony will set a dangerous precedent that could prevent other lawyers from engaging in public service.
However, Netburn pointed out that this is not a one for all law enforcement cases, adding that its solution has a strong public interest.
She claims that the deposition is not supposed to affect other departments.
Although Hinman was recently due to being dismissed for July 19, his testimony was postponed by the judge to allow the parties to determine the scope in advance.
Hinman may be asked to clarify if his 2018 speech on Ethereum is not official.
At the hearing, the SEC mentioned that it has not yet made a decision on Ether’s regulatory status. The regulator insisted that Hinman’s speech include his personal comments.
Ripple’s legal strategy flipped to label the SEC’s lawsuit as arbitrary and unfair, noting that previous decisions by the agencies believed that Bitcoin and Ethereum were not securities.
The SEC’s Ethereum ruling came in a 2018 speech by Hinman, and the facts turned out to be particularly controversial. Although many people in the cryptocurrency world celebrated uncovering the dark legal cloud for Ethereum, after Hinman launched a new theory, the speech raised eyebrows in the legal world after Hinman invoked a new doctrine that held a blockchain token was not a security once it became “sufficiently decentralized.” Until the speech, such a doctrine was unknown in securities law, where the “Howey Test”—a set of criteria set out in a 1946 Supreme Court ruling—remains the measure for determining what is a security.
Hinman, who left the SEC shortly after the Ethereum ruling, was also on trial. In other words, a business insider announced that he received a $1.6 million pension from his former Simpson Thatcher law firm during the U.S. Securities and Exchange Commission 2018 before he rejoins the firm. The company is a board member of the Enterprise Ethereum Alliance, which promotes commercial use cases for Ethereum.
Ripple Scores Major Win Against SEC
Ripple will try to convince the court that XRP should be viewed as similar to Bitcoin and Ethereum and should be exempt from SEC registration. It can also use standards discussed within the SEC to advance the argument.
However, according to Ripple’s lawyers, these documents have proven difficult to obtain, and they claim the agency relies on privileges to withhold internal memos.
The U.S. Securities and Exchange Commission argued yesterday that Hinman was speaking for himself, not the agency, despite admitting the agency’s staff helped draft the speech.
Judge Netburn, however, ordered Hinman to testify after Ripple and the SEC reached an agreement on the scope. Although Thursday’s ruling was a victory for Ripple, in larger cases it was a relatively minor procedural issue – the outcome is far from certain.