Ripple v. SEC case update as of June 19, 2023

With the cryptocurrency community still analyzing the details of the controversial speech and the later deposition of former division director at the United States Securities and Exchange Commission (SEC) William Hinman, the key people on Ripple’s team have shared their additional observations.

As John E. Deaton, the legal expert and amicus curiae for the blockchain company, pointed out, the SEC’s team had failed to redact the spelling of ‘ConsenSys,’ meaning that the names of the company directly related to Ethereum (ETH) and ConsenSys founder Joseph Lubin appear in the deposition quite often, according to Deaton’s Twitter thread on June 19.

ConsenSys meetings

Indeed, one part of the deposition included an exchange between the SEC’s enforcement counsel Jorge Tenreiro and Ripple’s attorney Reid M. Figel, in which the latter spells out ConsenSys’s name and the former agrees it was correct before Hinman proceeds to say he had four to five meetings with the said company between December 2017 and June 2018.

On top of that, Deaton pointed out that Hinman had also officially stated that he had consulted on the matter with Jay Clayton, an attorney who served as the SEC chairman between May 2017 and December 2020, speaking to him specifically about the ConsenSys meetings at least once or twice.

Interestingly, Lubin had hired Clayton’s law firm Sullivan & Cromwell (S&C), to represent ConsenSys shortly after Clayton’s nomination as the SEC chair in what Deaton called “a very smart and savvy move,” wondering why ConsenSys meetings interested Clayton so much and why Hinman suddenly called Lubin at ConsenSys.

Direct line to SEC

Furthermore, Deaton referred to his Twitter thread from April 2022, when he noted that, within two months of Clayton being sworn in, Lubin hired Patrick Berarducci from S&C, naming him Deputy General Counsel at ConsenSys, Co-Chair, Brooklyn Project & Global Fintech Co-Head, providing “a direct line to the SEC Chair.”

As the legal expert stressed at the time, S&C represented ConsenSys and the interests of the Enterprise Ethereum Alliance (EEA), Hinman’s law firm was a member of the EEA, and so was the law firm Perkins Coie, whose attorney Lowell Ness had provided Hinman with a memo giving Ethereum “a regulatory free pass.”

“Hinman collected $15M from his EEA law firm while at SEC; After Hinman followed the Perkins Coie Memo giving ETH a regulatory free pass, Hinman was later made a partner at a16z – the very same fund that hired Perkins Coie to write the memo lobbying for ETH’s free pass.”

More inconsistencies

In the recent thread, Deaton observed that Hinman, when asked if he knew Ness, said in his deposition that he “couldn’t pick him out of a crowd,” despite the two having met on March 28, 2018, shortly after Ness sent Hinman the above-mentioned memo, which the SEC’s official used in his infamous speech in which he argued that Ethereum was not a security.

“Oh btw, Lowell Ness has been a16z’s main crypto lawyer from the very beginning. Hinman is now a partner at a16z today. He’s partners w/those who helped write his ‘personal opinion’ speech that Ether isn’t a security. Oh btw, the only crypto mentioned in the Safe Harbor was ETH.”

And that’s not all, as Deaton said in an earlier tweet on June 17, “don’t forget that Clayton went to [hedge fund] One River immediately after leaving the SEC. One River had made a $1B bet on [Bitcoin (BTC)] and Ether, just before Clayton dropped the lawsuit bomb about XRP.”

The bright side

Meanwhile, on June 15, Ripple’s chief legal officer Stuart Alderoty said in an interview with CoinDesk that his blockchain company has, in many ways, “actually benefitted by the SEC suing us when they did because we’re at the end of our journey, and others are at the beginning of their litigation journey with the SEC.” 

In the interview, he also called for an official investigation into Hinman and added that other participants in the blockchain space were taking lessons from Ripple, referring to the recent SEC’s lawsuits against crypto exchanges Coinbase and Binance:

“I think if you look at the defenses and the narrative around some of the actors who are now on the wrong side of the ‘v.’ with the SEC, they are reading from the Ripple playbook, and that is perfectly fine with us.”

Meanwhile, the XRP token that is at the center of the long-running legal standoff was at press time changing hands at the price of $0.49, recording an increase of 0.98% on the day and a 4.92% gain across the previous month, despite a 5.29% loss over the past week, according to the latest charts.