The Security and Exchange Commission (SEC) has received criticism from the cryptocurrency community after disclosing its position on Ethereum and other digital currencies.
Recently released documents show how the SEC changed a speech made by its previous director of corporate finance, Bill Hinman, in 2018. The changes were made to avoid suggesting that Ether (ETH) was not a security.
In June 2018, SEC’s Director of Corporation Finance, William Hinman, stated at the Yahoo Finance All Markets Summit that Bitcoin (BTC) and Ether are not securities because they are decentralized.
Newly released documents reveal that the SEC staff revised Hinman’s speech multiple times before making it public. The edits suggest the agency’s concern over Hinman’s statement undermining its authority on future cryptocurrency regulations, including Ethereum.
For example, one of the edits reads:
Even with the caveats in the sentence, it seems that it would be difficult for the agency to take a different position on Ether in the future,” the edits to the documents read. “Further, the rest of the paragraph strongly implies that the thinking applies to Ether.
The speech writer, Hinman, sought advice from prominent players in the industry, including Coinbase, ConsenSys, and Andreessen Horowitz, as suggested by the documents. These entities faced SEC legal conflicts due to their cryptocurrency activities.
How Did Ripple React?
Ripple Labs, the company behind XRP, another popular cryptocurrency, was unhappy with Hinman’s speech regarding cryptocurrency regulations. Ripple has been locked in a legal dispute with the SEC since December 2020.
The lawsuit was filed against the company and two of its executives for selling XRP without registering it as security over seven years.
On June 13, Stuart Alderoty- Ripple’s chief legal officer, tweeted about the awaited documents. According to Stuart, they would exhibit SEC’s erroneous stance on the case based on their own words and actions instead of only Ripple’s arguments.
12/So what should happen now? First, remove the speech immediately from the SEC’s website…
— Stuart Alderoty (@s_alderoty) June 13, 2023
Ripple has claimed that XRP shares similarities with ETH and should not be subjected to differential treatment by regulators. Additionally, Ripple has accused the SEC of demonstrating bias towards Ethereum and introducing instability within the crypto market.
Ripple has sought to obtain the documents related to Hinman’s speech as part of its defense strategy. Ripple CEO Brad Garlinghouse said on June 12 that the documents would prove to be “well worth the wait.”
How SEC Documents Shake Up Crypto Industry
The crypto industry is currently experiencing turbulence, and the timing of the document release adds to this. On June 13, the federal court heard the SEC’s motion to freeze the assets of Binance.US following a series of legal actions against the exchange.
Furthermore, the crypto industry could face significant implications from the released documents. This is because they may shed light on the SEC’s views and regulatory approach towards crypto assets.
The crypto industry is likely to face significant repercussions due to some crucial documents. These papers may offer insight into the SEC’s perspective and regulations regarding crypto assets.
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Currently, Ripple and the SEC are embroiled in an ongoing lawsuit. Both parties are conducting discovery and motions. This case could set a crucial precedent for crypto regulation in the US.