U.S. Lawyer on SEC vs Ripple Lawsuit: ‘SEC Could Lose Both Its Pawn and Its Bishop’

by Ilan Hazan
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U.S. Lawyer on SEC vs Ripple Lawsuit: ‘SEC Could Lose Both Its Pawn and Its Bishop’

Jeremy Hogan, a partner at the American law firm Hogan & Hogan, who has been closely following and commenting on the U.S. SEC’s lawsuit against Ripple, says that the SEC lawyers’ latest move seems like a huge mistake.

As you may remember, on 22 December 2020, the SEC announced that it had “filed an action against Ripple Labs Inc. and two of its executives, who are also significant security holders, alleging that they raised over $1.3 billion through an unregistered, ongoing digital asset securities offering.” 

The most recent event in this lawsuit took place on February 17, when Ladan Stewart, Senior Trial Counsel at Division of Enforcement at the SEC wrote a letter to U.S. Magistrate Judge Hon. Sarah Netburn at U.S. District Court for the Southern District of New York, in which it said that it said that it was filing this motion for “partial reconsideration and clarification of the Court’s January 13, 2022 order.”

Stewart wrote:

This motion is limited to the Court’s ruling with respect to Entry 9 of Appendix A to Defendants’ motion to compel (D.E. 289), which includes a single, clean draft of a June 14, 2018 speech (‘Speech’) delivered by Bill Hinman, the then-Director of the SEC’s Division of Corporation Finance (‘Corp Fin’). After reviewing Entry 9, the Court found that ’emails concerning the [S]peech or draft versions are neither predecisional nor deliberative agency documents entitled to protection’ under the deliberative process privilege (‘DPP’), and ordered the SEC to produce Entry 9 and other documents ‘previously withheld based on the privilege that would be inconsistent with this order.’…

Reconsideration of this aspect of the Court’s decision is warranted because the Court based its decision on a single document relating to the Speech—one that Defendants chose to highlight for the Court—and did not consider the 67 other emails attaching drafts of the Speech that were before the Court on Defendants’ motion. These additional documents—along with other matters available to the Court and described below—demonstrate that the Speech was not ‘merely peripheral to actual policy formation’ and was in fact an ‘essential link in the SEC’s deliberative process with respect to Ether.’…

The Speech itself—and the many drafts and comments by SEC staff across different SEC divisions and offices deliberating the agency’s approach to the regulation of digital assets—show that Director Hinman and other SEC staff used the Speech to provide public guidance as to how Corp Fin would apply the federal securities laws to offers and sales of digital assets including Ether. Indeed, SEC regulations provide that Director Hinman’s public statements could be relied upon as representing the views of Corp Fin, the division he led.

According to a report by The Daily Hodl, in a YouTube video released on his firm’s YouTube channel “Legal Briefs”, Hogan explained why filing this motion was a bad idea:

In litigation, you have to have your strategy, your theory of the case or the theory of the issue that you are arguing, and you have to stick with it. In a DUI (driving under influence) defense case for example, your legal position may be that your guy had been drinking, but was not impaired. If that is your position, you get your client straight on it, and you do not waiver. If he gets up on the stand, and says ‘Well, now that I think about it, I don’t think I drank that night,’ you are screwed...

“The entire argument completely backtracks on what the SEC has been saying for almost the last year. What does that mean for a legal strategy standpoint? Look at what the SEC has just done. It’s not good, because it opens up the possibility that the SEC could lose both its pawn, and its bishop…

The judge has already made a very strong determination that as far as she’s concerned, the speech was Hinman’s personal opinion… Now, in this motion for reconsideration, it has given her more very similar documents to review and changed its position on the speech 180 degrees.


The views and opinions expressed by the author, or any people mentioned in this article, are for informational purposes only, and they do not constitute financial, investment, or other advice. Investing in or trading cryptoassets comes with a risk of financial loss.

Image Credit

Featured Image by “Donbrandon” via Pixabay

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