In a massive shake-up to the SEC’s case against Ripple, Judge Sarah Netburn has ruled that former SEC Director William Hinman will be called to stand to present testimony relating to the 2018 speech in which he deemed Ethereum a non-securities asset.
The sudden turn of events follows last week’s submission of a re-notice from Ripple’s lawyers which aimed to shut down the SEC’s attempt to reject the testimony of Mr Hinman, culminating in a critical teleconference call arranged by Judge Netburn yesterday afternoon.
Hinman could be called to the stand and face questions from Ripple’s lawyers as early as Monday. His inclusion in the case relates to a speech at the Yahoo Finance All Markets Summit in 2018.
“The Ethereum network and its decentralised structure, current offers and sales of Ether are not securities transactions,” he said during the address.
“And, as with Bitcoin, applying the disclosure regime of the federal securities laws to current transactions in Ether would seem to add little value.”
He delivered the speech while serving as the director of the SEC’s Division of Corporation Finance.
Lawyers argue he implied that Ripple, like Ether, was a digital asset used for utility within a decentralised network structure as opposed to a securities product.
This could prove to be pivotal in the ongoing legal battle, as the defence against the accusation that Ripple operated as an unregistered securities offering since 2012 rests on two key points…
- Whether XRP should be considered a securities asset at all.
- Whether the SEC gave reasonable notice of its decision to classify XRP as a securities asset.
The SEC had attempted to reject the deposition, arguing that the evidence presented by the Ripple team had been insufficient to justify the deposition.
However, Judge Netburn has decided to push forward the XRP case, due to its potential implications for the wider crypto industry, saying it represented “significant policy decisions in our markets, the amount in controversy is substantial and the public’s interest, in this case, is significant”.
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