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Documents related to William Hinman's 2018 speech have been released in the filings of the US Securities and Exchange Commission (SEC) vs Ripple lawsuit. The documents showed that, prior to the SEC's former director of Division of Corporation Finance Hinman's speech where he publicly claimed "Ether was not a security", there was a lot of discussions regarding the content of the speech within the SEC.
In an email sent to multiple SEC employees before the speech, Hinman said, "we do not need to see a need to regulate Ether, as it is currently offered, as a security." The Trading and Markets Department commented, "this speech is what the general public/market participants have been asking for, so we are very supportive of the speech and what it is communicating."
However, the Trading and Markets Department had concerns over the words the speech used. "Because the list of factors is so extensive – and appears to include things that go beyond the typical Howey analysis – we have concerns this might lead to greater confusion on what is a security." Meanwhile, some other SEC officials expressed concerns over the opinion that Ether was not a security.
In 2020, the SEC sued Ripple, alleging the sale of $XRP constituted an unregistered securities offering. In Ripple's defense, the company said the SEC failed to provide clear guidance on which tokens constituted securities. Hinman's speech became a key in the case. Previously, the SEC insisted that the speech was Hinman's personal view instead of the agency's stance. However, with the reveal of the documents, the claim is widely questioned.
Fox Business' journalist Eleanor Terrett said, "it seems SEC officials who weighed in on the speech believed the goal was to provide market guidance and tried to write it in a way that would convey that. Thus, in the Ripple case, the SEC lawyers' argument that the speech was solely Hinman's opinion and not intended for market guidance could now be undermined."
Stuart Alderoty, Chief Legal Officer at Ripple, said, "we now can all see 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. Although Hinman claimed that the speech was his personal view, he and the SEC touted it as guidance."
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