Ripple Obtains Contested SEC Documents in XRP Crypto Battle

On Oct 21, 2022

Ripple Labs Inc. has obtained internal Securities and Exchange Commission emails and other documents that it says could help turn the tide in its high-profile fight with the commission over the fate of its XRP crypto token.

The so-called Hinman documents—handed over by the SEC on a judge’s order—remain confidential, Ripple’s general counsel, Stuart Alderoty, tweeted Thursday, adding: “I’ve always felt good about our legal arguments, and I feel even better now.” A Ripple spokeswoman confirmed the company has obtained the documents.

Many of the documents relate to a 2018 speech given by William Hinman, former SEC director of Corporation Finance. In the speech, Hinman discussed the application of federal securities laws to digital assets, a topic that became critically important for the company in 2020, when the SEC said it was suing Ripple and its top executives, arguing that it misled buyers of its XRP token by failing to register it as a security and failing to provide sufficient disclosure.

Ripple maintains that XRP is instead a commodity, and thus not subject to the SEC’s jurisdiction. The outcome of the case—which centers on the legal definition of an “investment contract”—could have a major impact on SEC Chair Gary Gensler’s effort to gain regulatory authority over the cryptocurrency space. The crypto industry has broadly backed Ripple, calling on Gensler to let Congress lead on crypto regulation.

Over 18 months and 6 court orders later, we finally have the Hinman docs (internal SEC emails and drafts of his infamous 2018 speech). While they remain confidential for now (at the SEC’s insistence), I can say that it was well worth the fight to get them.
— Stuart Alderoty (@s_alderoty) October 20, 2022

The commission had sought to block release of the documents since Ripple initially asked for them a year-and-a-half ago, first on grounds of deliberative process privilege, and then on the basis of attorney-client privilege. But the judge hearing the case, Analisa Torres of the US District Court for the Southern District of New York, last month said the SEC had to turn over the material, as it met the test for relevancy under the “‘extremely broad’ concept of relevance used to resolve discovery motions.”

Both Ripple and the SEC have asked Judge Torres to grant summary judgment in the case. Ripple CEO Brad Garlinghouse has said he expects to have an answer in the SEC’s lawsuit by the first half of next year.

The SEC declined to comment.

The case is SEC v Ripple Labs Inc., D.N.Y., No. 1:20-cv-10832, 9/29/22.