Ripple’s native token XRP saw gains after Terra’s stablecoin UST depegged. XRP rose from $0.377384 on Thursday to $0.430217 by Friday-end. Ripple has been riding high on the wave of SEC’s lawsuit with former SEC Corporation Finance Director William Hinman’s statements escalating legal proceedings.
The Securities and Exchange Commission, on Wednesday, claimed a small victory against Ripple Lab. The judge granted SEC’s request to file a brief reply in regards to the regulator’s attorney-client privilege claims about the 2018 communications made by the former Finance Director who said Ether (ETH) was not a security. An exchange of emails revealed that Hinman had a conflict of interest in making the speech before delivering it. He had highlighted in a speech, in 2018, that the Ethereum network and its decentralized structure, current offers, and sales of Ether are not securities transactions.
Hinman says the 2018 communications cannot be protected under the attorney-client privilege. Legal experts say shielding any correspondence through attorney-client privilege, any consultation was undertaken in Hinman’s personal capacity will not fall under the same scope. Moreover, his communication would not contain confidential agency information. And if the SEC does find any information that could be protected, Hinman could claim attorney-client privilege. There has also been a legal tussle to resolve the dispute out of court.
SEC’s primary argument is that Ripple, via its XRP token, violated the Securities Act of 1933. Ripple says XRP serves purposes that invalidate its classification as a security. Its filing highlights the XRP’s function as a medium of exchange, thus, the SEC has no authority to regulate it. Ripple argued its token is used as an intermediary for remittance payments and is not a security. Ripple’s legal representative requested internal SEC communications concerning the uncertainty on which assets the SEC can oversee. It also said that the SEC had not timeously clarified which assets fell under its jurisdiction.
Furthermore, the regulator had not warned Ripple about how the existing laws apply to its product – XRP.
