An obscure footnote reveals important information
An obscure footnote in a Ripple opposition brief from 2022 has caught the attention of pro-XRP lawyer John Deaton, potentially impacting the ongoing battle between the United States Securities and Exchange Commission (SEC) and Ripple.
Confirmation of XRP discussion prior to Hinman speech
On May 22, Deaton took to Twitter to share his discovery. The short footnote in a recent Ripple legal document confirms that XRP was indeed discussed “between SEC staff prior to the Hinman speech.”
The significance of internal debates
Internal debates within the SEC regarding XRP’s classification as a security could play a crucial role in the ongoing lawsuit between the regulatory body and Ripple. The SEC initially filed a legal action against Ripple in December 2020, accusing the company of conducting an unregistered securities offering through the sale of XRP.
Ripple’s argument against XRP as a security
Ripple has consistently denied that XRP is a security, asserting that it does not meet the criteria of the Howey test, which is used to determine whether a transaction qualifies as a security.
The revealing third-party footnote
The highlighted footnote, believed to originate from a third-party outside of the SEC, stated:
- “There are reasonable grounds to conclude that XRP does not satisfy all elements of the Howey Analysis and is therefore not a ‘security’ for purposes of the federal securities laws.”
During a May 22 Twitter Spaces session hosted by Fox Business journalist Eleanor Terrett, Deaton emphasized that this statement provides evidence that XRP’s status as a security was discussed within the SEC.
Potential implications and upcoming developments
While the SEC has not officially acknowledged internal discussions regarding XRP, Deaton drew attention to the fact that XRP was the third-largest cryptocurrency, after Bitcoin and Ethereum, back in June 2018. He referenced former SEC director William Hinman’s speech, where he indicated that Bitcoin and Ethereum were not securities. According to Deaton, this suggests that some individuals within the SEC may have considered treating XRP similarly.
Deaton also noted that the citation “SEC-LIT” in the document sets it apart from other emails, which were referred to as “SEC-PROD.” He believes these documents, which include the Hinman emails and speech drafts, are significant and required for litigation.
Deaton encouraged the community to pay attention to June 13, when the Hinman materials are expected to be unsealed. This date will likely provide further insight into the impact of this discovery on the ongoing case.
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