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SEC withholds its documents on BTC, ETH to hide something damning in case vs. Ripple

  • The SEC opposes the motion in which Ripple requests a preliminary conference to compel disclosure of all documents related to the classification of Bitcoin and Ethereum.
  • Attorneys Jeremy Hogan and John E. Deaton assume that the SEC is trying to hide something “damning”.

In a letter released yesterday, the U.S. Securities and Exchange Commission (SEC) requested the rejection of Ripple s motion for the release of all documents related to the classification of Bitcoin and Ethereum as non-securities. The SEC claims that the submission is “disproportionate” and “overbroad.”

Defendants request discovery far beyond anything that could be considered relevant or proportional to the needs of this case. Defendants seek discovery about two unrelated digital assets (Bitcoin and Ether) and discovery of internal SEC documents—neither of which is relevant to any cognizable defense—to try to shift the blame for Defendants’ own actions and inactions to the SEC.

The SEC again invokes that the sole key issue to be resolved is whether “whether Ripple’s digital asset, XRP, was offered and sold by Ripple as an ‘investment contract’ under Howey and thus was offered and sold in violation of Section 5; and whether the Individual Defendants aided and abetted Ripple’s violations”.

As reported by CNF, Ripple filed a pre-motion letter to compel disclosure of the above documents, arguing that the SEC is withholding “potentially exculpatory evidence.” This theory is also supported by lawyers Jeremy Hogan and John E. Deaton, who is currently still fighting for intervention in the case by XRP holders. Hogan wrote via Twitter:

Well well well. Now we know exactly what documents the SEC is nervous about Ripple seeing. SEC: “The Requested Bitcoin and Ether Documents Are Not Relevant.” Translation: “The Bitcoin/Ether docs are not only relevant but probably damning.” Guaranteed.

For his part, Deaton commented on Hogan’s tweet, explaining that they must be “relevant” because otherwise the SEC “wouldn’t be so worried” about it. “They also don’t want the internal debate about XRP being released,” Deaton continued. According to him, the SEC’s decision to take action against Brad Garlinghouse and Chris Larsen will prove to be a mistake.

Normally, the SEC would this argument but since they charged the two executives with aiding and abetting, things will look different, Deaton says:

If the SEC don’t believe or can’t agree whether XRP is a security (and they are the experts on what’s a security), how can you expect Brad and Chris to believe it’s one. If the case was just against @Ripple, SEC wins this issue, but because they’re going after the executives the way they are, I believe the SEC should turn over all #XRP documents, emails and discussions.

What could the SEC be hiding?

Speculation already flared last week about what the SEC might be withholding or fearing. One topic was the classification of Ethereum as a non-security and in this context the role of William Hinman, who made the statement.

Hinman joined the SEC from law firm Simpson Thacher, which was a member of the Ethereum Alliance and led the $100 million IPO of Chinese mining company Canaan. Also explosive is that during his time at the SEC, Hinman received a pension from Simpson Thacher of about $1.6 million, which is far more than his salary at the SEC.

After leaving the SEC, Hinman returned to his old law firm Simpson Thacher. Understandably, this gives the events a somewhat stale aftertaste.

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