SEC sends letter claiming that Ripple has no right to testimony on XRP from ex-director William Hinman
In a letter to U.S. Magistrate Judge Sarah Netburn this week, the Securities and Exchange Commission (SEC) argues that Ripple failed to meet the heavy burden of demonstrating exceptional circumstances sufficient to justify such a deposition.
SEC: Ripple not entitled to testimony on XRP from ex-director
At the present time, it appears that the SEC is doubling down on its attempt to block William Hinman, the former director of the SEC’s Division of Corporation Finance, from testifying in the SEC v. Ripple lawsuit. Hinman clearly was a high-ranking SEC official, Stewart argued, adding that Hinman’s supervision of registration and disclosure requirements was critical to the SEC’s operations and to that of the United States’ capital markets.
“Defendants want Director Hinman to sit through hours of questioning, where an SEC lawyer repeatedly objects and instructs him not to answer, just so Defendants can use the deposition transcript to argue to this Court that the SEC is not entitled to assert a deliberative process privilege,” Stewart wrote, in response to an earlier court filing by Ripple. “This strategy is not an ‘exceptional circumstance’ justifying the deposition of a high-ranking SEC official… as virtually every agency enforcement action involves pre-enforcement, pre-decisional privileged deliberations.”
The SEC has asked the court to rescind the subpoena issued to Hinman until after a decision is made on the SEC’s motion against Ripple’s fair notice defense. If approved, it could make Hinman’s removal irrelevant.
Stewart wrote: “Defendants cannot point to a single case where the deposition of an SEC official of Director Hinman’s rank was allowed.”
The letter stated:
“Defendants are thus asking this Court to make new law, by ordering the deposition of someone who held one of the highest-ranking positions within an independent federal agency, in order to question him about external meetings and about internal SEC deliberations that are privileged,” Stewart wrote, adding that it was contrary to legal precedent and imposed significant burdens on the witness, the parties, and the Court.
Ripple previously stated that Hinman has unique first-hand knowledge about the SEC’s communications with third parties and about the agency’s adoption or approval of his well-publicized speech in 2018 about the regulatory treatment of cryptocurrencies. However, Stewart that Hin that Ripple was simply wrong in claiming that they are entitled to elicit Hinman’s testimony.
“If Defendants wish to discover facts asserting the SEC’s assertion of deliberative process privilege — and, later, to litigate it — they can ask the SEC, the party asserting the privilege. The SEC has already produced and will continue to produce privilege logs covering internal communications relating to the Speech,” Stewart wrote. “Defendants will not be able to obtain better, more detailed information from Director Hinman than they would already have from the SEC’s privilege log.”
Communications with third parties have already been provided by the SEC to Ripple, Stewart added, pointing out that Ripple could seek information from third parties directly, without the SEC’s permission or court’s intervention.
Following the December 2020 SEC lawsuit, several US-based crypto exchanges such as Coinbase and Kraken have either delisted or suspended XRP trading. However, XRP is still traded outside of the US and remains popular in Asia, especially in Japan. XRP is currently trading around 0.61, which is also in the bearish position of the entire cryptocurrency market.
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