{"id":48012,"date":"2021-08-20T14:19:15","date_gmt":"2021-08-20T11:19:15","guid":{"rendered":"https:\/\/forklog.com\/en\/?p=48012"},"modified":"2025-09-02T00:08:54","modified_gmt":"2025-09-01T21:08:54","slug":"former-sec-official-warned-ripple-that-xrp-could-be-deemed-a-security","status":"publish","type":"post","link":"https:\/\/u1f987.com\/en\/former-sec-official-warned-ripple-that-xrp-could-be-deemed-a-security\/","title":{"rendered":"Former SEC official warned Ripple that XRP could be deemed a security"},"content":{"rendered":"<p>Former head of the SEC&#8217;s corporate finance division <span data-descr=\"U.S. Securities and Exchange Commission\" class=\"old_tooltip\">SEC<\/span> William Hinman stated that he warned Ripple about the risk that XRP could be deemed a security. The deposition transcript indicates this.<\/p>\n<p>He recommended that the company stop selling the tokens to comply with the regulator&#8217;s requirements.<\/p>\n<blockquote class=\"wp-block-quote is-layout-flow wp-block-quote-is-layout-flow\">\n<p>\u00abTheir [Ripple&#8217;s] interest was whether there was a way to restructure [the company&#8217;s operations] to bring it into compliance with securities laws. The first thing I told them: you continue offering XRP without any restrictions that apply to securities. If you want to bring your business into compliance with the law, you need to stop doing this, and they understood me\u00bb, Hinman said.<\/p>\n<\/blockquote>\n<p>Lawyer Jeremy Hogan noted that the published transcript of Hinman&#8217;s testimony contains excerpts selected by the SEC. Of 500 pages, only 90 became public, with parts of the witness&#8217;s statements redacted.<\/p>\n<figure class=\"wp-block-embed is-type-video is-provider-youtube wp-block-embed-youtube wp-embed-aspect-16-9 wp-has-aspect-ratio\">\n<div class=\"wp-block-embed__wrapper\">\n<iframe loading=\"lazy\" title=\"Attorney &quot;XRP&quot; Hogan Handles SEC v Ripple: Pending Motions, Predictions, and the Hinman Deposition!\" width=\"500\" height=\"281\" src=\"https:\/\/www.youtube.com\/embed\/z8wxV1cqS-0?feature=oembed\" frameborder=\"0\" allow=\"accelerometer; autoplay; clipboard-write; encrypted-media; gyroscope; picture-in-picture; web-share\" referrerpolicy=\"strict-origin-when-cross-origin\" allowfullscreen><\/iframe>\n<\/div>\n<\/figure>\n<p>Hogan studied Hinman&#8217;s testimony and highlighted two key points. First, the witness discussed with Ripple representatives possible options for legal compliance in 2020.<\/p>\n<p>Only after that did he notify the company&#8217;s leaders and lawyers that they were violating the law. By that time the SEC was already pursuing an investigation against the organization \u2014 a lawsuit against it <a href=\"https:\/\/u1f987.com\/en\/news\/sec-files-suit-against-ripple\"> was filed in December 2020 <\/a>.<\/p>\n<p>In Hogan&#8217;s view, this information plays to Ripple&#8217;s advantage, which contends that the regulator did not notify the company in a timely manner of a potential violation of the law. He stressed that the argument concerns only the period from January to December 2020.<\/p>\n<p>Secondly, the lawyer saw a contradiction in the witness&#8217;s testimony when asked about the SEC&#8217;s policy on employees owning securities. The latter cannot buy assets related to regulator investigations. Moreover, any employee transaction in securities must be pre-approved.<\/p>\n<p>A Ripple representative asked Hinman whether this rule extended to digital assets before 2018. The witness hesitated briefly and then answered, &#8220;no.&#8221;<\/p>\n<blockquote class=\"wp-block-quote is-layout-flow wp-block-quote-is-layout-flow\">\n<p>\u00abUntil 2018, the SEC did not regard digital assets as securities with respect to the ethics of its employees. &#8230; And this is good for Ripple in terms of the strategy of fair notice defense during the period from 2013 to 2018,\u00bb Hogan concluded.<\/p>\n<\/blockquote>\n<p>Hinman is a witness for the defendants. The SEC tried to appeal his subpoena in court, but <a href=\"https:\/\/u1f987.com\/en\/news\/ripple-wins-subpoena-for-former-sec-official-to-testify\">this challenge was denied<\/a>.<\/p>\n<p>Earlier, the watchdog Empower Oversight identified a conflict of interest in the actions of the former regulator employee. <a href=\"https:\/\/u1f987.com\/en\/news\/rights-groups-suspect-former-sec-officials-of-biased-assessment-of-cryptocurrencies\"><\/p>\n<p>The legal fight between Ripple and the SEC continues to gain momentum. Last week the agency filed a motion seeking access to <a href=\"https:\/\/u1f987.com\/en\/news\/sec-seeks-access-to-terabytes-of-ripple-employees-slack-messages\">\u00abterabytes\u00bb of Slack messages by the company&#8217;s employees<\/a>.<\/p>\n<p>On August 16, Ripple sought to challenge the regulator&#8217;s demand. In the motion, the company described the regulator&#8217;s request as \u201cburdensome and highly disproportionate\u201d to Judge Sara Netburn.<\/p>\n<blockquote class=\"twitter-tweet\">\n<p lang=\"en\" dir=\"ltr\"><a href=\"https:\/\/twitter.com\/hashtag\/XRPCommunity?src=hash&#038;ref_src=twsrc%5Etfw\">#XRPCommunity<\/a> <a href=\"https:\/\/twitter.com\/hashtag\/SECGOV?src=hash&#038;ref_src=twsrc%5Etfw\">#SECGOV<\/a> v. <a href=\"https:\/\/twitter.com\/hashtag\/Ripple?src=hash&#038;ref_src=twsrc%5Etfw\">#Ripple<\/a> <a href=\"https:\/\/twitter.com\/hashtag\/XRP?src=hash&#038;ref_src=twsrc%5Etfw\">#XRP<\/a> Ripple has filed it\u2019s Opposition to the SEC\u2019s Motion to Compel Ripple to search for and produce relevant Slack communications.<a href=\"https:\/\/t.co\/IPCQFMCKmW\">https:\/\/t.co\/IPCQFMCKmW<\/a><\/p>\n<p>\u2014 James K. Filan \ud83c\uddfa\ud83c\uddf8\ud83c\uddee\ud83c\uddea (@FilanLaw) <a href=\"https:\/\/twitter.com\/FilanLaw\/status\/1427374060179181571?ref_src=twsrc%5Etfw\">August 16, 2021<\/a><\/p><\/blockquote>\n<p> <script async=\"\" src=\"https:\/\/platform.twitter.com\/widgets.js\" charset=\"utf-8\"><\/script><\/p>\n<blockquote class=\"wp-block-quote is-layout-flow wp-block-quote-is-layout-flow\">\n<p>\u00abOther courts that have considered similar requests to disclose Slack data have held that disclosure of such information is burdensome and costly. In cases where the requesting party has already received a substantial amount of data, they denied the corresponding requests\u00bb, Ripple&#8217;s motion states.<\/p>\n<\/blockquote>\n<p>In response, the SEC noted that as of July 30, 2021, Ripple had not attempted to challenge the request. Moreover, the company had previously admitted that some messages pertain to the case.<\/p>\n<blockquote class=\"twitter-tweet\">\n<p lang=\"en\" dir=\"ltr\"><a href=\"https:\/\/twitter.com\/hashtag\/XRPCommunity?src=hash&#038;ref_src=twsrc%5Etfw\">#XRPCommunity<\/a> <a href=\"https:\/\/twitter.com\/hashtag\/SECGov?src=hash&#038;ref_src=twsrc%5Etfw\">#SECGov<\/a> v. <a href=\"https:\/\/twitter.com\/hashtag\/Ripple?src=hash&#038;ref_src=twsrc%5Etfw\">#Ripple<\/a> <a href=\"https:\/\/twitter.com\/hashtag\/XRP?src=hash&#038;ref_src=twsrc%5Etfw\">#XRP<\/a> The SEC has filed a Letter opposing Ripple\u2019s Motion to Seal. <a href=\"https:\/\/t.co\/FBugE3lS4g\">pic.twitter.com\/FBugE3lS4g<\/a><\/p>\n<p>\u2014 James K. Filan \ud83c\uddfa\ud83c\uddf8\ud83c\uddee\ud83c\uddea (@FilanLaw) <a href=\"https:\/\/twitter.com\/FilanLaw\/status\/1428464122077884423?ref_src=twsrc%5Etfw\">August 19, 2021<\/a><\/p><\/blockquote>\n<p> <script async=\"\" src=\"https:\/\/platform.twitter.com\/widgets.js\" charset=\"utf-8\"><\/script><\/p>\n<p>In the SEC&#8217;s view, the complexity of the process of disclosing information should not present a problem in this case, since the Commission does not set strict timeframes for the respondents.<\/p>\n<blockquote class=\"wp-block-quote is-layout-flow wp-block-quote-is-layout-flow\">\n<p>\u00abOverall, there are no real prospects that the parties will fully settle this case within a few months\u00bb, the agency concluded.<\/p>\n<\/blockquote>\n<p>As a reminder, in the proceedings with the SEC, Brad Garlinghouse&#8217;s company also sought documents from the cryptocurrency exchange Binance. <a href=\"https:\/\/u1f987.com\/en\/news\/ripple-seeks-documents-from-binance-in-sec-case\"><\/p>\n<p>On August 16, Ripple sought to challenge the regulator&#8217;s demand. In the motion, the company described the regulator&#8217;s request as \u201cburdensome and highly disproportionate\u201d to Judge Sara Netburn.<\/p>\n<p style=\" margin: 12px auto 6px auto; font-family: Helvetica,Arial,Sans-serif; font-style: normal; font-variant: normal; font-weight: normal; font-size: 14px; line-height: normal; font-size-adjust: none; font-stretch: normal; -x-system-font: none; display: block;\">   <a title=\"View Exhibit B to SEC Motion Redacted Version of Hinman Deposition 08172021 on Scribd\" href=\"https:\/\/www.scribd.com\/document\/520943945\/Exhibit-B-to-SEC-Motion-Redacted-Version-of-Hinman-Deposition-08172021#from_embed\" style=\"text-decoration: underline;\">Exhibit B to SEC Motion Redacted Version of Hinman Deposition 08172021<\/a> by <a title=\"View ForkLog's profile on Scribd\" href=\"https:\/\/www.scribd.com\/user\/456422024\/ForkLog#from_embed\" style=\"text-decoration: underline;\">ForkLog<\/a> on Scribd<\/p>\n<p><iframe loading=\"lazy\" class=\"scribd_iframe_embed\" title=\"Exhibit B to SEC Motion Redacted Version of Hinman Deposition 08172021\" src=\"https:\/\/ru.scribd.com\/embeds\/520943945\/content?start_page=1&#038;view_mode=scroll&#038;access_key=key-Iujfu49N3J2x4GHDBCwL\" data-auto-height=\"false\" data-aspect-ratio=\"0.75\" scrolling=\"no\" id=\"doc_22007\" width=\"100%\" height=\"600\" frameborder=\"0\"><\/iframe><\/p>\n<p>Read ForkLog&#8217;s Bitcoin news on our Telegram \u2014 cryptocurrency news, prices and analysis.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>The former head of the SEC&#8217;s Division of Corporate Finance, William Hinman, said he warned Ripple about the risk that XRP could be deemed a security. The deposition transcript indicates this.<\/p>\n","protected":false},"author":1,"featured_media":48013,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"select":"1","news_style_id":"1","cryptorium_level":"","_short_excerpt_text":"","creation_source":"","_metatest_mainpost_news_update":false,"footnotes":""},"categories":[3],"tags":[1162,112,128],"class_list":["post-48012","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-news-and-analysis","tag-court-cases","tag-ripple","tag-sec"],"aioseo_notices":[],"amp_enabled":true,"views":"19","promo_type":"1","layout_type":"1","short_excerpt":"","is_update":"","_links":{"self":[{"href":"https:\/\/u1f987.com\/en\/wp-json\/wp\/v2\/posts\/48012","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/u1f987.com\/en\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/u1f987.com\/en\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/u1f987.com\/en\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/u1f987.com\/en\/wp-json\/wp\/v2\/comments?post=48012"}],"version-history":[{"count":1,"href":"https:\/\/u1f987.com\/en\/wp-json\/wp\/v2\/posts\/48012\/revisions"}],"predecessor-version":[{"id":48014,"href":"https:\/\/u1f987.com\/en\/wp-json\/wp\/v2\/posts\/48012\/revisions\/48014"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/u1f987.com\/en\/wp-json\/wp\/v2\/media\/48013"}],"wp:attachment":[{"href":"https:\/\/u1f987.com\/en\/wp-json\/wp\/v2\/media?parent=48012"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/u1f987.com\/en\/wp-json\/wp\/v2\/categories?post=48012"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/u1f987.com\/en\/wp-json\/wp\/v2\/tags?post=48012"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}