Top Ripple Lawyer Suggests SEC Employee Bias

Top Ripple lawyer Stuart Alderoty has brought to light the impartiality regulations that govern SEC employees, potentially implying bias in the commission’s stance on different digital assets.

As Alderoty highlights, federal law, as outlined in 5 CFR 2635.101(b)(14), mandates all SEC employees to act impartially and maintain an appearance of impartiality. The question then, as posed by the law, is whether a reasonable person, equipped with the facts, would question the employees’ impartiality.

These comments come in the wake of the release of the “Hinman emails,” a series of exchanges between William Hinman, former director of the SEC, and members of the SEC staff.

The emails, which were preparation for Hinman’s speech in June 2018, tackle the classification and regulation of different digital assets. Hinman’s assertion that Bitcoin and Ethereum were not securities in his view, raised eyebrows in the cryptocurrency community, with speculation that the emails might reveal a bias favoring Bitcoin and Ethereum within the SEC.

The emails shed light on the internal dialogue within the SEC leading up to Hinman’s speech, including the application of the Howey Test, which determines whether an asset is a security under U.S. law.

Despite some staff reservations, Hinman proceeded to state in his speech that federal securities laws’ disclosure requirements did not apply to Bitcoin or Ether, creating the impression of a differential approach to various digital assets.

The release of the Hinman emails comes amidst Ripple’s ongoing lawsuit with the SEC, which accuses Ripple of selling unregistered securities.

Ripple’s legal team has sought access to these emails as a part of their defense strategy. Alderoty’s tweets further emphasize Ripple’s concerns, shedding light on potential irregularities in the SEC’s approach to crypto regulation.