SEC worried about ‘Ether is not a security’ statement in unsealed Hinman documents.
Newly released documents reveal that a 2018 speech given by former director of the Security and Exchange Commission’s (SEC) corporate finance division, Bill Hinman, underwent edits that raised concerns that his statement could undermine the notion that Ether (ETH) is a security. The SEC comments accompanying the edits warned that this could risk locking the agency into a position that would be difficult to change in the future. The edits to the documents read, “Even with the caveats in the sentence, it seems that it would be difficult for the agency to take a different position on Ether in the future. Further, the rest of the paragraph strongly implies that the thinking applies to Ether.”
The Hinman documents refer to internal SEC messages about a 2018 speech in which Hinman said that while cryptocurrencies like Bitcoin (BTC) and Ether may start off as securities, they could become more like commodities once they become sufficiently decentralized. Ripple CEO Brad Garlinghouse called the documents “well worth the wait.”
The unsealing of these documents comes at a turbulent time for the crypto industry. On June 13th, the federal court heard the SEC’s motion to freeze the assets of Binance.US, following a series of legal actions against the exchange. The SEC first took legal action against Ripple in December 2020, alleging that the sale of its native XRP (XRP) token constituted an unregistered securities offering. Since then, Ripple has denied that XRP is a security, arguing that it does not satisfy the Howey test.
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