Ripple’s chief legal officer, Stuart Alderoty, has made a compelling call to investigate the underlying motivations that prompted former Securities and Exchange Commission (SEC) official William Hinman to deliver his now-famous speech in 2018. This demand for an inquiry surfaced in a Twitter thread on June 13, coinciding with the public release of the Hinman documents, which shed light on the circumstances surrounding the speech. Surprisingly, these documents revealed that Hinman disregarded warnings from other divisions within the SEC.
During the noteworthy speech in 2018, Hinman boldly proclaimed that Ether, valued at $1,746, should not be classified as a security due to its “sufficient decentralization.” He elaborated on the specific criteria that need to be met in determining whether a cryptocurrency qualifies as a security.
Alderoty, after scrutinizing the recently disclosed documents, argued that Hinman had purposefully disregarded the cautionary advice of his SEC counterparts. According to Alderoty, the speech contained speculative analysis unsupported by legal foundations, leading to considerable confusion within the cryptocurrency industry regarding the classification of tokens as securities. Alderoty emphasized that officials should solely apply the law rather than attempting to create new rules, firmly stating that Hinman’s speech should no longer hold any weight in serious discussions on security classifications.
Brad Garlinghouse, CEO of Ripple, echoed Alderoty’s criticism of the regulator through his Twitter thread on June 13. Garlinghouse condemned the decision to proceed with the speech despite facing significant opposition, deeming it “unconscionable.”
Prominent pro-XRP lawyer and founder of CryptoLaw, John Deaton, also believed that an investigation into Hinman’s motivations is justified. Deaton pointed out that the reference to the speech as the “Ether Speech” raises questions about the driving forces behind Hinman’s address. He further highlighted Hinman’s prior association with the Enterprise Ethereum Alliance, which advocates for Ethereum blockchain technology.
It is worth noting that Hinman had previously worked at the law firm Simpson Thacher & Bartlett LLC, which happened to be a member of the Ethereum Enterprise Alliance. This connection adds another layer of intrigue to the circumstances surrounding the speech.
The calls for an investigation from Alderoty and Deaton draw attention to potential biases or conflicts of interest that may have influenced Hinman’s stance. By seeking transparency and accountability, they aim to address the concerns raised by the cryptocurrency community and ensure that future discussions on security classifications are based on sound legal principles rather than subjective analysis.