CRYPTOCURRENCY LENDER CELSIUS NETWORK FILES FOR BANKRUPTCY AS PRICES CRASH
Cryptocurrency prices were edging higher early Tuesday morning with Ethereum topping the $3,000 mark for the first time in two weeks.(REUTERS/Dado Ruvic/Illustration / Reuters)
The official, corporation finance chief William Hinman, argued in the speech that all digital coins except bitcoin and ether were possibly illegal and unregistered securities subject to SEC action. Not long after, the SEC charged Ripple with selling unregistered XRP tokens.
In arguing the case, the SEC initially stated Hinman’s speech was the opinion of one official, not designed to give market guidance by the commission. The agency has since changed its position on the nature of Hinman’s speech when Judge Netburn demanded all documents relating to the creation of the speech be handed over to the court.
The plain implication of her comment was that the Bar would have guidance that it could rely upon in advising clients,” he said.
After former SEC Chairman Jay Clayton testified on Capitol Hill a couple of weeks later and referred to Hinman’s speech “in a manner that was obviously intended as an endorsement,” lawyers in the field understood that they “could rely on what the SEC’s Chairman had to say as well as what the Director of Corp Fin had to say,” Daugherty said.
“There was no daylight between their views,” he said.
According Daugherty, the bar “always” relies on speeches and other informal communications by SEC officials. “I learned this myself while working at the SEC.
A U.S. magistrate judge has ruled that the Securities and Exchange Commission (SEC) should give Ripple access to some of the documents it has been fighting to keep hidden, including a draft email by former director William Hinman on Ether.
Ripple has been going after several documents held by the SEC, which it believes could help prove its case in which it claims that the watchdog didn’t give fair notice. Among them is an email with the draft speech that Hinman famously delivered in 2018, claiming that Ether isn’t a security.
Judge Sarah Netburn of the Southern District of New York has ruled in favor of the payments company, granting it access to some of the documents, including the email.
However, the judge also denied Ripple access to other documents, which she said are protected by the deliberative process privilege (DPP).
DPP is a common-law principle that protects information showing the process by which a government agency reached a particular decision or made a specific policy from disclosure to third parties.
The SEC has been arguing that DPP protected the email. However, as the judge pointed out in her ruling, Hinman himself stated during a deposition that he was expressing his personal views when he said that Ether wasn’t a security.
“…the personal views of agency employees are not protected by the privilege unless they bear on ‘the formulation or exercise of policy-oriented judgment’” Judge Netburn stated.
Ripple has scored another victory in its battle with the United States Securities & Exchange Commission (SEC) over the latter’s $1.3 billion lawsuit.
SEC motion to quash Hinman deposition denied
A recent ruling by the US District Court Judge Sarah Netburn denied the SEC’s motion to quash a deposition of a former agency official.
Ripple Labs sought to question former SEC director William Hinman through a deposition originally scheduled for June 30.
Southern District Court of New York City alleges the US Securities and Exchange Commission of committing hypocrisy.
In a recent development, in SEC-Ripple lawsuit, Magistrate Judge Sarah Netburn has labelled SEC of acting as hypocrite. The remarks came about SEC’s behavior with regards to William Hinman’s 2018 speech.
Magistrate Judge denies the SEC’s attorney-client privilege claims in the #Ripple case, whilst calling out the SEC for their “hypocrisy.” pic.twitter.com/Ep4IriOP4E
— Watcher.Guru (@WatcherGuru) July 13, 2022
In June 2018, William Hinman, gave a speech at a conference.
In his speech Hinman stated that Ethereum is not a security. After the SEC filed the lawsuit against Ripple, they were quick to point out Hinman’s remarks.
But later, SEC took a U-turn as it sought DPP (Deliberative Privilege Process) for Hinman’s speech. After SEC was denied by the court, it then filed another motion asking the court to consider attorney-client principle of law.
It is to be noted here that previously the SEC had continuously been trying to persuade the court that Hinman’s speech is not relevant to the lawsuit.
During the hearing Judge Sara Netburn stated that it is hypocrisy on SEC’s hands as on the one hand the agency is arguing that the speech is not relevant to the case on the other it is conceding ‘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’.
Now, such remarks coming from the judge
Netburn is of much significance.
The conference is scheduled to take place on June 7. Since no call-in information has been provided, this appears to be an in-person conference only.
As reported by U.Today, the SEC submitted a new motion to keep the Hinman emails under wraps by citing attorney-client privilege in late April.
The SEC argues that the privilege applies because these documents reflect confidential communications between Hinman and SEC attorneys about the famous Ethereum speech, in which the former declared that the Ether token was not a security.
The agency asserts that Hinman was a client of SEC attorneys who gave him legal advice regarding the legal status of digital assets to ensure that his speech was consistent with federal securities laws.
Orders requiring the SEC to turn over internal documents related to a 2018 speech on digital assets aren’t just wrong on the law, they are likely to have a chilling affect on policy deliberations throughout the federal government, the agency says.
The Securities and Exchange Commission is fighting to keep Ripple Labs Inc. from getting documents related to the speech by William Hinman, then the Director of the Division of Corporate Finance.
Magistrate Judge Sarah Netburn rejected the agency’s objections based on relevance and the deliberative process privilege in a series of discovery orders this spring.
Although Hinman and the SEC admit that agency staff discussed his speech, it appears that this speech was ‘merely peripheral to actual policy formation,’ and not an ‘essential link’ in the SEC’s deliberative process with respect to Ether,” she added.
Hinman’s speech, which he made while he was the director of Corporate Finance at the SEC, was taken by many in the digital currency market as an official SEC position. The then-SEC chairman Jay Clayton even referred to it as proof that the SEC was offering guidance to the market during an interview months later.
However, Hinman turned around last year and claimed that he was just giving his take on the market.
Judge Netburn turned down Ripple’s request to access other documents, including notes between the SEC and Ripple and discussions it held with other government agencies on digital currencies.
The SEC vs.