SEC Must Surrender Hinman Email on Ether to Ripple, Judge Rules

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The Securities and Exchange Commission (SEC) must deliver an email containing a draft letter from former manager William Henman about whether ether is a security for Ripple in an ongoing lawsuit brought by the regulatory agency against the Crypto startup, a judge said Thursday.

The Securities and Exchange Commission (SEC) filed a lawsuit against Ripple and members of its leadership at the end of 2020 on charges of selling and continuing to sell the cryptocurrency XRP in violation of federal securities law. The agency and Ripple have been involved in a lengthy transfer and reception process about what type of documents should be provided through the discovery process, with Ripple seeking to obtain a number of documents detailing SEC’s internal communications and policies.

For their part, SEC lawyers claimed that these documents contain employee deliberations, and are therefore protected against discovery. District Judge Sarah Nitburn, of the Southern District of New York, ruled that some of these documents are indeed protected, but ordered the regulator to turn over others, including an email containing Hinman’s letter and some notes from meetings between SEC employees and third parties. not ripple.

At press time, neither the SEC nor Ripple responded to CoinDesk’s request for comment on the judge’s recent decision in the case.

Read more: Judge rejects Ripple’s proposal to disclose crypto transactions to SEC employees

An email for a 2018 letter draft of former Corporation Finance Director Hinman is included in the list of documents to be submitted. Henman gave the speech in June 2018, telling the audience at a conference that in his view ether was not safe.

The speech was seen as pivotal in the crypto industry, given the sale of the first 60 million Ether (the original token of the Ethereum blockchain) to raise funds for the Ethereum Foundation. Ether is now seen as a commodity in the US, where the CFTC oversees derivatives products based on cryptocurrency.

He said at the time that Hinman’s speech reflected his own views, a point the judge noted Thursday in her ruling.

In a 23-page ruling, the judge said, “Personal opinions of agency staff are not protected by privilege unless they influence the ‘drafting or exercise of policy-oriented judgment.’…Accordingly, emails relating to speech or copies of drafts are not documents A prior or deliberative agency is entitled to protection.

While the email containing the draft letter must be delivered, a separate email sent by the CFO’s office the day before his letter does not need to be resent, the judge wrote.

“The documents relating to the SEC staff’s legal analysis of XRP, contained the initial opinions of the SEC team during the XRP Enforcement Division’s investigation, and did not make a recommendation to the SEC,” it said.

These documents are designed to investigate XRP, and thus qualify as “the type of pre-decision legal analysis and trading that is protected by the privilege of a trading operation.”

The judge also ruled that the SEC is not required to deliver notes from meetings between SEC employees and Ripple, as well as interagency discussions.

Other documents to be kept by the SEC include a lien over communications between SEC crypto czar Valerie Szczepanik and the US Treasury office, as well as a presentation she gave to former SEC commissioner Michael Piwowar.

In all, Ripple sought access to 14 entries and three additional documents.

“The Securities and Exchange Commission has further been directed to review its lien record and produce, in whole or in part, any documents previously withheld on the basis of the lien that might conflict with this order,” Judge Netburn wrote.

Read more: Ripple awaits resolution of SEC lawsuit before it goes public, CEO says

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