Could Hinman's Documents Undermine SEC's Crypto Crackdown?
The United States Securities and Exchange Commission (SEC) keeps attacking the crypto industry. Will the release of Hinman’s documents put an end to this?
The crypto domain talks about Hinman's documents — the 2018 SEC drafts and emails based on the former Director of the SEC Division of Corporation Finance, William Hinman's speech — containing speeches and debates regarding cryptocurrencies' classification as securities.
Back then, Hinman said, "Putting aside the fundraising that accompanied the creation of Ether, based on my understanding of the present state of Ether, the Ethereum network, and its decentralized structure, current offers and sales of Ether are not securities transactions."
While Hinman was part of the SEC leadership when the agency filed the ongoing lawsuit against Ripple, he stepped down and no longer officially commented on the matter.
And yet Hinman's documents play an essential role in the crypto domain. Accordingly, the court's decision to not allow the SEC to seal them in the ongoing SEC vs Ripple case exhilarated the entire community, not just Ripple.
And with good reason.
The refusal to seal these documents may seriously undermine the SEC's effort to crack down on the entire industry. The SEC makes no secret that it plans to go after most projects, including Ethereum and, most recently, Filecoin, which they believe meet the SEC's security criteria.
Many people have pointed out that before becoming the SEC's chairman, Gary Gensler's stance on crypto was entirely different from when he was a professor at MIT. Back then, he did not view them as securities.
Some believe he had a change of heart due to his desire to establish his authority.
Ripple's CEO, Brad Garlinghouse, is among those who hinted at such a possibility. He also criticized the SEC on other occasions.
In October 2022, when Ripple finally received Hinman's documents, he tweeted, "The SEC wants you to think that it cares about disclosure, transparency, and clarity. Don't believe them. When the truth eventually comes out, the shamefulness of their behavior here will shock you."
Brad Garlinghouse’s tweet. Source: Twitter
Hinman's documents could potentially put an end to the current SEC's arbitrariness and the strategy of changing rules on the go — something that, for example, has been highlighted by Coinbase.
While the company prepares for a legal battle with the SEC, it also points out that when they registered their business, the rules did not state that they were violating any security-related laws. Therefore, changing the rules is neither a good nor fair practice.
It is yet to be known when Hinman's documents will be made available to the broader public. Some anticipate their release by June 6. Yet even if they're open to a limited audience, that's already a big win for the crypto community, as they serve as a reference point that helps understand the SEC's logic.
Most notably, they could help Ethereum, which is also being scrutinized, prepare for a potential legal battle or avoid it altogether by dropping the case.
Previously, GNCrypto reported that Gensler was given an ultimatum.
