Big Error by SEC in Ripple Labs Court Case A Potentially Expensive One

According to crypto legal expert Jeremy Hogan, who has been reporting on Ripple Labs court case with the U.S. Securities and Exchange Commission (SEC) from day 1, the regulator has made some significant errors.

It is all to do about documents related to former SEC Director Wiliam Henman’s famous speech back in 2018 where he stated that Ethereum was not a security.

Although Judge Magistrate Sarah Netburn has ordered the SEC to produce the internal emails surrounding the Hinman speech, the regulator has been battling the order since with a hearing on Wednesday centered on the SEC’s latest objections.

During all this time, Hogan tells his 147k+ subscribers of his ‘Legal Briefs’ YouTube channel, the SEC has been making one big mistake, which was to use different strategies in its fight to have the Hinman emails denied. He said:

“But there was a big mistake made by the SEC in this hearing… Remember last year we talked about a theory of a case and why it’s so important to stick with your theory in litigation. And then we talked about how it was a mistake for the SEC to change its argument on what Hinman’s speech was. If it was going to make the gambit that it was Hinman’s personal opinion, you have to stick with that, and here’s why:

Now we know Judge Netburn has already ruled that, at least for discovery purposes, Hinman’s speech was his personal opinion. So the SEC can now argue it’s not relevant to anything, and that’s fine, but we know that now hurts the SEC in those discovery motions, so there was a trade-off there. But the SEC attorney was trying really hard today in arguing various positions in order to try to win this motion, which was probably not really possible to even win…

The judge asked, ‘Is the SEC taking the position now that the speech reflected the Division of Corporate Finance’s position?’ And the SEC attorney said ‘Yes.’ Now she tried to equivocate a little bit after that, but the first and the direct answer was ‘Yes.’”

In addition, the SEC’s attorney stated that the purpose of the speech was to provide market guidance on how the Commission would be treating digital assets going forward.

Hogan explains that the beforementioned remarks  could bite the SEC in the proverbial ‘ass’ as it “puts the Hinman speech back into play as market guidance and puts it back into relevance.”

Ripple Labs, its CEO Brad Garlinghouse and co-founder Chris Larsen were taken to court by the SEC in December last year over the sale of XRP, which the SEC alleges to be an unregistered security.