The judge overseeing the Securities and Exchange Commission’s (SEC) case against Ripple has denied a motion by the SEC to seal documents relating to a speech given by former Division of Corporate Finance Director Bill Hinman in 2018.
The speech has stayed in circulation ever since it was given, thanks to Hinman’s comments on BTC and ETH, where he said he did not believe either token amounted to a security.
Ripple sought the internal SEC communications relating to drafting the speech in discovery. The SEC resisted this, filing a motion in September 2022 to seal the communications, thereby excluding them from the case.
The SEC argued that the communications amounted to legal advice and should be subject to attorney-client privilege, and in any case, said that they were irrelevant to the case due to the fact that Hinman was not speaking on behalf of the SEC. They said that admitting the documents would be highly prejudicial to the SEC’s case and risked the ‘openness and candor’ within the SEC.
The court disagreed. In the order denying the SEC’s motion, the court said that the documents were ‘judicial documents subject to a strong presumption of public access’ and were not protected by privilege because they do not relate to the SEC’s formal position or policy.
The judge also granted separate requests by the SEC and Ripple to redact information. The commission successfully sought the redaction of information concerning witness identities and the personal and financial information of Ripple.
A request by Ripple to seal information relating to its business was partly successful, with the Court agreeing to redact contract, investor, and employee data. However, the Court refused to redact information concerning XRP revenue figures and money offered to digital asset exchanges in order to list XRP.
The ruling does not mean that the Hinman documents will be presented at trial. Parties may challenge the admissibility of documents once they’ve been entered into discovery, and it seems likely that the SEC will do just that.
For now, the court’s ruling has breathed new life into an old speech. Hinman’s comments were made way back in 2018, and a lot has changed since then. The SEC appointed Gary Gensler as its Chair in 2020, and Gensler has since led the Commission on a path of direct confrontation against securities violations taking place within the digital asset industry. Gensler’s own public comments would suggest the SEC’s thinking on BTC and ETH has shifted considerably since the near prehistoric days of Hinman.
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