SEC Puts a Hurdle on Ripple’s Path As New Developments Spring Up

The U.S. Securities and Exchange Commission (SEC) has put a hurdle on Ripple’s way to getting charges against them dropped. On April 19th, 2022, the Commission filed a joint status report at the Eastern District of Virginia to delay the Freedom of Information Act (FOIA) litigation proceedings. Essentially, the report aims to delay the provision of vital information that could potentially dismiss its lawsuit against Ripple (XRP).

The delay follows Judge Sarah Netburn’s orders that former SEC official Willian Hinman is deposed over his alleged violation of the Commission’s rules. Hinman, a former finance director at SEC, is accused of improprieties and conflict of interest by the Commission’s ethics office. He is said to have openly advocated for Ethereum over Ripple, which caused the latter’s value to crash. The SEC is being accused of vicariously and willfully disadvantaging Ripple and hindering its institutional adoption. It interfered with fair Markets by claiming that Ripple, a multi-purpose digital token on a decentralized ledger, is a security

Ripple (XRP) has been banking on the discovery (production) of email correspondence by the SEC involving Hinman and his old law firm to prove a conflict of interest as a preliminary objection to the SEC’s case. The emails from the SEC show that the Commission’s ethics officials had warned their colleague William Hinman of a direct financial interest in Simpson Thacher (his old firm) and thus; “should not be having any meetings with his old firm.”

The hurdles put by the Commission on Ripple’s path have been perceived as malicious by crypto enthusiasts and whistleblowers, including Empower Oversight, who are party to the case. Speaking on the matter, Jason Foster, Founder and President of Empower Oversight, stated that:

“The SEC is trying to duck accountability and delay judicial review of its failure to comply with FOIA by hiding behind the confidentiality interests of the law firm with whom its own ethics officials said its employee had a conflict.”

The Commission is aware that acceding to the discovery orders would automatically terminate the case and is therefore looking to buy time. 

Initially, the Commission had complied with Empower Oversight’s request for information and had provided a 200-paged discovery containing the email conversations between SEC and Hinman (former finance director).

Empower Oversight is now requesting that the Eastern District Court take on its regular fast procedures in the case, based on the SEC’s move to halt proceedings in the FOIA action as charged.