Ripple (XRP) rose from $0.377384 to $0.439217 on Friday in the face of an ongoing Securities and Exchange Commission lawsuit following comments by former SEC corporate finance director William Hinman.
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Ether are not securities, Hinman said. (Bitrates.com)
William Hinman: Ether is not a security
A judge has accepted the SEC’s request to file a response regarding the case against Ripple Lab. The case was ignited by Hinman’s speech, which said that Ethereum is not a security.
The emails recovered as evidence strengthened the claim that Hinman had some conflict of interest associated with those comments.
In 2018, Hinman’s speech included this statement:
“Based on my understanding of the current state of Ether, the Ethereum network and its decentralized structure, the current offering and sale of Ether is not a securities transaction.”
Hinman’s speech states that Ethereum is not a security which is tagged as an opinion based on its understanding of Ether and the Ethereum network.
Furthermore, the decentralized nature, and Ether transactions and sales, are not secure to the best of their personal knowledge and understanding.
Hinman, on the other hand, testified that there are four criteria, except for an argument provided by the SEC that said communications made in 2018 would not fall under attorney-client privilege.
XRP total market cap at $20.60 billion on the weekend chart | Source: TradingView.com
In addition, communications by Hinman are not confidential information. Furthermore, if the SEC finds any other information that may be protected, the only person who can make a claim is Hinman.
Ripple Violated the Securities Act of 1933?
Ripple’s defense in this case is that the purpose of XRP cannot be to classify the coin as a security. The SEC has no power or authority over Ripple, given that XRP functions as a medium of exchange.
Furthermore, Ripple states that the currency is used as an intermediary for remittances, not a security.
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Ripple also defended that the SEC did not clarify the classification of digital assets, failing to provide timely guidance or warnings to Ripple Labs on how current laws apply to XRP.
However, the SEC contended that Ripple had actually consulted him in 2012 to recognize its product as an investment that required SEC regulation.
Hinman’s speech, however, further strengthens Ripple’s defense as it implies that if Ether or XRP was purchased to participate in a decentralized platform, and not to earn from trading activity, it certainly would. There is no security.
Featured image from CryptoGlobe, chart from TradingView.com