Judge clears Ripple to question former SEC official over XRP case

By: Ali Raza
Ali Raza
Ali plays a key role in the cryptocurrency news team. He loves travelling during his spare time and enjoys… read more.
on Jul 16, 2021
  • A U.S. District Court Judge has allowed Ripple to deposit former SEC official over XRP case.
  • SEC initially opposed Ripple’s request, but the judge overturned the counterclaim.
  • Ripple wants to use William Hinman’s claim Ethereum to justify the XRP token claim.

Ripple’s defense of the ongoing lawsuit against it by the U.S. Securities and Exchange Commission (SEC) has received a slight boost.

Sarah Netburn, U.S. District Court Judge, has turned down SEC’s motion to cancel the deposition of William Hinman, former director of SEC’s Division of Corporate Finance.

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Hinman stated sometime in 2018 that the offer and sale of Ether is not a securities transaction, based on his understanding of the decentralized structure and the Ethereum (ETH/USD) network.

However, Ripple has pointed to his deposition to back its claim that the XRP/USD token is not a security. If the SEC doesn’t appeal against the court’s decision, Ripple may be asked to question Hinman about his judgment on Ether. The idea is to apply the same judgment to XRP.

Ripple wants to justify XRP through the deposition

Ripple has always maintained that the SEC doesn’t have any basis to take XRP as security since the token is a medium of exchange used for both domestic and international transactions.

The SEC initially fought the subpoena, arguing that Ripple’s questioning may set a negative example where high-level government officials will be subjected to depositions concerning every policy, regulation, or law. The SEC added that it will be forced to invoke the “Exemption 5” (the deliberative process privilege) if Hinman is deposed.

Judge denies SEC’s earlier appeal

The watchdog also stated that it speaks through enforcement actions and doesn’t base its actions on the opinion of its staff or individual commissioners. As a result, any statement credited to Hinman is regarded as “deliberative”.

However, Judge Netburn stated that the issue is not a “run-of-the-mill SEC enforcement case” and his deposition will not act as a reference to other similar cases in the future.

She added that the case will need vital policy decisions to conclude and its conclusion has a direct impact on the market and the general public. The judge stated that such importance supersedes whatever implication the deposition will bring in the future.

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