Ripple Labs can question ex-SEC chief in court over XRP
07:32, 16 July 2021
Ripple Labs can depose a former Securities and Exchange Commission (SEC) official in the company’s ongoing battle against the lawsuit accusing Ripple of misleading investors about its XRP cryptocurrency, a federal judge has ruled.
The US-based tech company will question William Hinman, a former SEC director of corporation finance, who in his 2018 speech at Yahoo All Finance said that Ethereum and sales of ether were “not securities transactions”, which the SEC’s legal team claims has no bearing on its case against Ripple.
XRP lawyers think that the speech will help them to build the case that XRP should not be seen as a security, in line with what Hinman said about ether, and claimed that the SEC should have provided reasonable notice of its intention to regard the cryptocurrency as such.
Legal battle
In December 2020 the US financial watchdog filed an action against Ripple co-founder Christian Larsen and CEO Bradley Garlinghouse alleging that the pair raised funds through the sale of XRP in an unregistered security offering to investors with limited information about its business.
The agency argued that the two men failed to register XRP as a security, which would require significant business disclosures about its operations and financial conditions to ensure that investors make informed decisions. Meanwhile, the SEC claims that Larsen and Garlinghouse personally profited by about $600m from selling XRP, all while ignoring the legal advice that the cryptocurrency could be considered an investment.
The legal battle sparked the ongoing debate about whether cryptocurrencies need regulation to operate fairly. “We welcome thoughtful proper regulation and I think that’s been missing,” Asheesh Birla, RippleNet’s general manager, told CoinDesk on Tuesday.
“I’m confident in our governing body that they will come up with the right kind of regulation that not only protects consumers but also enables companies like Ripple and Coinbase to continue to innovate in this space,” he added, commenting on the lawsuit.
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