The Securities and Exchange Commission (SEC) has been denied a motion to conceal former director William Hinman’s speech drafts, in which he said ether wasn’t a security.
District Judge Sarah Netburn ordered the emails and drafts of Hinman’s speech weren’t protected by deliberative process privilege (DPP) in August 2021, because they reflect the director’s personal opinions of securities law rather than the SEC’s. The SEC motioned for reconsideration; it was denied.
The SEC then argued the documents should be protected under attorney-client privilege in July. Netburn denied; the SEC appealed; District Court Judge Analisa Torres denied the motion on Thursday.
In her statement explaining the denial, Judge Netburn said the SEC was acting immoral in its bid to keep the speech drafts out of court by grasping at straws with legalese. Despite the commission’s best attempts, the Hinman speech drafts must be produced.
“The hypocrisy is arguing to the court, on the one hand, that the speech is not relevant to the market’s understanding of how or whether the SEC will regulate cryptocurrency, and on the other hand, that Hinman sought and obtained legal advice from SEC counsel in drafting his speech, suggests that the SEC is adopting its litigation positions to further its desired goal, and not out of a faithful allegiance to the law,” her statement read (our emphasis).
On Thursday, Judge Torres agreed with Judge Netburn on each point raised in her statements denying the SEC’s claims.
“The Court has reviewed the remainder of the thorough and well-reasoned Orders for clear error and finds none. Accordingly, the Court OVERRULES the SEC’s objections and directs the SEC to comply with the Orders,” Torres concluded.
The SEC first took Ripple Labs to court back in 2020. Top execs Brad Garlinghouse and Christian Larsen were accused of knowingly selling unregistered securities through Ripple (XRP) tokens.
- Ripple countered, arguing Hinman’s speech lay the groundwork for assuming cryptocurrencies were not securities.
- The SEC has done everything it can to prevent the speech’s draft documents from being admissible in court.
- The legal battle has captured the attention of the crypto community — its future ruling may set a precedent.