Ripple is calling for a fresh investigation into William Hinman, a former director of the U.S. Securities and Exchange Commission’s Division of Corporation Finance, and a speech he gave in 2018 that has been frequently cited in questions concerning whether or not a digital asset meets the definition of an investment security.
"An investigation must be conducted to understand what or who influenced Hinman, why conflicts (or, at the very least, appearances of conflicts) were ignored, and why the SEC touted the speech knowing that it would create 'greater confusion,'" Ripple Chief Legal Officer Stuart Alderoty wrote in a thread on Twitter.
The statement came after documents in an ongoing lawsuit brought by the SEC against Ripple were released earlier in the day that showed behind-the-scenes edits and correspondence about the speech.
Alderoty said the documents demonstrated that Hinman didn't address internal concerns about the speech before making it public.
"Hinman ignored multiple warnings that his speech contained made-up analysis with no basis in law, was divorced from the Howey factors, exposed regulatory gaps, and would create not just confusion, but 'greater confusion' in the market," Alderoty wrote. He said the SEC should remove the speech from its website and said it should no longer be invoked in discussion about whether or not a security is a token.
"Unelected bureaucrats must faithfully apply the law within the constraints of their jurisdiction. They can’t - as Hinman tried - create new law," Alderoty continued.
Ripple CEO Brad Garlinghouse echoed the view.
"It’s absolutely unconscionable that a regulator – when presented with so much pushback on what he was about to say / how he compiled this fake 'test' in the first place – decided to move forward anyway, and throw an entire industry into chaos," he wrote on Twitter.
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