Another Win For Ripple As Judge Orders The Deposition Of Former SEC Official, William Hinman
Ripple Labs Inc has been given the go-ahead to question former SEC official William Hinman in its lawsuit with the Securities and Exchange Commission (SEC).
ETH Is Not A Security – William Hinman
Ripple had asked the US Judge Sarah Netburn to let it depose the former director of the SEC's Division of Corporation Finance. This motion was aimed at revealing the rationale behind the SEC’s decisions and policies.
In a prepared speech, William Hinman asserted that Ether, the native token of the Ethereum network, was not a security. He based his reason on the decentralized structure of the Ethereum network, noting that the sales of Ether were not considered securities transactions.
Ripple believes that Hinman's deposition would add more weight to its claim that the XRP token is not a security. The blockchain firm intends to use Hinman's testimony as a means to understand the commission’s position and why it classifies XRP as a security, Bloomberg reports.
Although the SEC tried to suppress the deposition of Hinman, the motion was denied by Netburn in a ruling on Thursday.
SEC had argued during the hearing that it was yet to decide on Ether's regulatory status at the time of Hinman's speech. The regulator said that his speech only contained personal remarks and did not reflect the agency's viewpoint.
The SEC also argued that Hinman's testimony would subject high-level government officials to depositions, and that could deter other qualified people from taking public service jobs.
However, Netburn noted that this is not “a run of the mill” enforcement case, adding that the deposition is not supposed to affect other SEC departments.
Judge Netburn concluded that Hinman must sit for the deposition after Ripple and the SEC agree on the scope in advance.
Ripple Continues To Portray SEC's Stance As Unfair
Thursday's ruling is the latest clash in the lawsuit that began last December when the SEC sued Ripple, its CEO Brad Garlinghouse and co-founder Chris Larsen. The watchdog alleged that they had conducted unregistered securities with their XRP token sales worth $1.3 billion.
Ripple's strategy has been fixed on portraying the SEC's lawsuit as partial and unfair. The firm argues that the XRP should be treated as a commodity offering just like Bitcoin and Ethereum. BTC -0.07% Bitcoin / USD BTCUSD $ 60,966.23
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Ripple had earlier disclosed that the regulators couldn't regulate XRP because it is majorly used for international and domestic transactions as a digital currency, suggesting XRP as a medium of exchange and not a security.
While the latest ruling is a win for Ripple, it could be considered a relatively small win in a much larger case, one for which the outcome is uncertain.