In a slight decline for Ripple Labs’ XRP, which serves as the backbone for the company’s payments and exchange network services, prices saw a 1.3% decline in the 24 hours to 10:15am in Hong Kong. The decline came as a reversal of the gain that initially followed the release of an internal Securities and Exchange Commission (SEC) document on Tuesday, which Ripple said could provide evidence of unfair targeting by regulators through a lawsuit. Over the past seven days, XRP has witnessed a 2.05% decline.
The legal battle between Ripple and the SEC began in December 2020 when the commission filed a lawsuit accusing Ripple of offering unregistered securities through the sale of XRP. Ripple’s chief executive, Chris Larsen, and chief executive officer, Brad Garlinghouse, were also named as co-defendants for allegedly aiding and abetting Ripple’s breaches.
As part of the ongoing lawsuit, multiple documents were made public on Tuesday about former SEC director William Hinman’s speech about classifying cryptocurrencies as securities. Initially, the SEC attempted to seal these documents, but in a ruling favoring Ripple, Judge Analisa Torres of the US District Court for the Southern District of New York ordered their release in May.
In June 2018, Hinman’s speech was significant because he stated that transactions involving the cryptocurrency Ether were not transactions in securities. He emphasized that implementing the federal securities laws’ disclosure regime for Ether transactions would result in minimal returns, as would Bitcoin. Ripple has since used this speech to support a fair notification defense in its ongoing legal battle.
The newly released document includes email exchanges between Hinman and some SEC staff while preparing for his 2018 speech. Notably, one email reveals SEC employee comments on the draft, expressing concerns that taking too definitive a position on the disclosure provisions of the federal securities laws could undermine the SEC’s efforts regarding other crypto assets classified as securities while emphasizing the SEC’s reluctance to label Bitcoin. Therefore.
Stuart Alderoty, Ripple’s chief legal officer, has called for an investigation into Hinman’s conduct, claiming that the documents demonstrate Hinman’s disregard for warnings and reliance on trumped-up legal analysis. According to Alderoty, these actions show behavior and encroachment by the SEC beyond the boundaries of its jurisdiction.
Echoing this sentiment, Ripple Labs CEO Brad Garlinghouse criticized regulators for continuing Hinman’s speech despite internal opposition, describing it as “absolute nonsense.” Garlinghouse further asserted that the SEC exploited the lack of regulatory clarity, weaponizing it effectively through their enforcement actions since the speeches were delivered.
The recent slight drop in the price of XRP following the release of SEC documents highlights the ongoing legal battle between Ripple and regulatory authorities. Ripple’s claims of unfair targeting are gaining traction as newly disclosed documents show potential breaches by William Hinman. The ramifications of this legal dispute continue to spread through the cryptocurrency community, stressing the need for clarity in the regulatory framework governing digital assets.