Ripple Snags Legal Victory As Judge Approves Hinman’s Deposition

Divya  |  Jul 16, 2021

Ripple scored a small win in its legal battle with the Securities and Exchange Commission(SEC) as district court judge Sarah Netburn authorized the deposition of a former SEC official, William Hinman. The digital payments firm and its two senior executives are accused of selling $1.3 billion worth of XRP tokens in violation of securities laws by the SEC.

Judge Allows William Hinman’s Deposition in SEC vs Ripple Case

On Thursday, US District Court Judge Sarah Netburn ordered the deposition of William Hinman, who previously served as the director of SEC’s Division of Corporation Finance. The former official is known for his controversial stance on Ethereum. 

The ruling indicates that Ripple can ask Hinman to explain his comments on Ethereum before the court. In 2018, Hinman had stated that the altcoin was not a security since it was “sufficiently decentralized.” His comments were celebrated by the crypto community for clarifying Ethereum’s legal status, but they drew intense scrutiny as well. Hinman left the SEC shortly after the statement.

For its part, the SEC has argued that Ripple’s request was unrelated to the case. It  asserted that such depositions “would subject high-level government officials to depositions regarding every law, regulation, or policy they consulted on or spoke about and that later underlay an enforcement action.” The regulator has also maintained that Hinman’s comments on Ethereum contained his personal opinions. 

By questioning Hinman, Ripple hopes to establish that it is being treated unfairly by the SEC while pointing at the agency’s previous rulings that exempted Bitcoin and Ethereum from registration.

The Case Involves Significant Policy Decisions: Netburn

Despite SEC’s repeat objections to Hinman’s testimony, Judge Netburn has determined that the former “high-ranking official” must sit for the deposition.

While explaining that “this is not a run-of-the-mill SEC enforcement case,” Judge Netburn added that the matter “involves significant policy decisions in our markets, the amount in controversy is substantial and the public’s interest, in this case, is significant.”

Hinman was originally scheduled to testify in the ongoing proceedings on July 19, but the judge postponed his questioning till the parties involved arrived at a consensus on the scope.

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