Ripple’s Chief Legal Officer (CLO), Stuart Alderoty, has demanded an investigation into the actions of former SEC official Bill Hinman, five years after his speech on cryptocurrencies.
The SEC’s lawsuit against Ripple and the subsequent release of public emails and drafts have shed light on the matter, prompting Ripple’s CLO to call for accountability.
The Speech and its Impact
Examining Hinman’s speech, it becomes evident that he declared a token to be non-security once it achieved sufficient decentralization, introducing factors to consider for such determination.
Despite Hinman claiming it was his personal view, the SEC promoted it as guidance, with then-SEC Chair Jay Clayton publicly referencing it. However, the SEC’s stance on the speech has been inconsistent in litigation, even as it remains on the agency’s website.
Ignored Suggestions and Reservations
Senior SEC officials have revealed that Hinman disregarded suggestions to align his factors more closely with the established Howey analysis and overlooked the crucial question of whether a digital asset meets the legal standards of a security.
The SEC also expressed concerns about including a statement directly about Ether (ETH) in the speech, as it would hinder the agency’s ability to take a different stance on ETH in the future.
Ripple’s CLO Calls for Investigation and Removal
Ripple‘s CLO, Stuart Alderoty, demands the immediate removal of Hinman’s speech from the SEC’s website and an investigation into the influences on Hinman, why conflicts were overlooked, and why the SEC endorsed the speech despite foreseeing potential confusion.
Alderoty argues that Hinman’s speech should no longer be referenced in discussions regarding the security classification of tokens, emphasizing that unelected bureaucrats must adhere to existing laws rather than creating new ones.
Joining the criticism, Ripple CEO Brad Garlinghouse voices his dissatisfaction with the SEC’s lawsuit against him and co-founder Chris Larsen.
The lawsuit alleges that they sold XRP as an unregistered security, while Ripple argues that XRP is a digital currency similar to Bitcoin or Ethereum.
Garlinghouse highlights the chaos caused by the SEC’s actions in the cryptocurrency industry and expresses concerns over the regulatory approach.