Deaton Explains How Hinman Docs Impact SEC Case Against Ripple Execs

Attorney Deaton believes the recently released Hinman docs impact the SEC case against Ripple executives Brad Garlinghouse and Chris Larsen.

Attorney John Deaton, the founder of Crypto Law, said the Securities and Exchange Commission (SEC) could not prove its case against Ripple executives Chris Larsen and Brad Garlinghouse.

For context, in December 2020, the SEC charged Garlinghouse and Larsen, alongside Ripple, with offering XRP as an unregistered security. The SEC alleged that the Ripple execs were reckless in distributing XRP.

However, attorney Deaton, in a recent interview with Thinking Crypto host Tony Edward, said the release of Hinman Docs makes it impossible for the regulatory agency to argue that Garlinghouse and Larsen were reckless.

With the recently released Hinman Docs, the SEC cannot argue that @bgarlinghouse and @chrislarsensf were reckless.

“How in the world can the SEC prove that case? They can’t.” pic.twitter.com/ZiMzYFfOx1

— CryptoLaw (@CryptoLawUS) July 12, 2023

Hinman Docs Saga

It bears mentioning that the Hinman documents relate to internal communications at the SEC regarding former director William Hinman’s 2018 speech on crypto. Following court orders, Ripple released the documents on June 13, 2023. 

Although Hinman declared Bitcoin and Ethereum as non-securities during the speech, the documents show that top SEC officials were uncertain whether crypto assets fall under the agency’s purview. 

Moreover, top SEC officials warned Hinman against giving the speech, fearing it would cause greater confusion in the market. 

Hinman Docs Impact SEC’s Case Against Ripple Execs

Commenting on the development, attorney Deaton said Hinman’s docs impact the agency’s case against Garlinghouse and Larsen. Per Deaton, the SEC will have to prove before a jury that Garlinghouse and Larsen were reckless in distributing XRP.

Deaton explained that within the case context, the SEC indirectly suggests that XRP is a security, and Ripple’s execs were supposed to know that.

Furthermore, he questioned how the SEC intended to prove the case when top SEC officials said during the drafting of Hinman’s speech that the remark could cause greater confusion.

Additionally, Deaton said Hinman’s documents could come into play if the jury allows Ripple to argue that they did not have fair notice about the law.

SEC Won’t Win Case Against Ripple Execs

Meanwhile, attorney Deaton has reiterated that the SEC cannot win its case against Ripple execs. As reported earlier, the pro-XRP lawyer said no reasonable jury would find Larsen and Garlinghouse guilty of the charges leveled against them by the SEC.

Deaton said the SEC only sued Ripple’s execs because it has always been a bully. He added that if the regulatory agency struggled to understand whether XRP was security in 2018, Garlinghouse and Larsen could not be “reckless” in distributing the coin in 2013.

Notably, Deaton’s remark was about XRP Howey analyses conducted by the SEC and a third party in 2018. The reports conclude that XRP does not satisfy all prongs of Howey.

Aside from Deaton, prominent XRP community member Mr. Huber also speculated that the SEC would lose the case against Ripple execs.