- Deaton slams ex-SEC official Hinman’s role in Ripple case amid partisanship claims.
- Hinman’s involvement questioned as SEC faces backlash after losing Ripple lawsuit.
- Deaton supports Stark’s view of political influence in the SEC’s decision-making process.
Following accusations against the U.S. Securities and Exchange Commission (SEC) by John Reed Stark, attorney John Deaton has expressed criticism of a former SEC official’s role in the Ripple lawsuit. Deaton’s remarks responded to a Twitter post claiming that the SEC is not following the law when differentiating assets from securities.
Bill Hinman’s Role in the Ripple Lawsuit
According to Deaton, Bill Hinman, who served as the director of the SEC’s corporate finance division from 2017 to 2020, initiated the case against Ripple. Deaton stated in a post that Hinman was so invested in the case that he even returned to the SEC after his tenure had ended to suppress any discussions of a pre-suit settlement.
Deaton further noted that despite Hinman’s enforcement lawyers drafting an XRP Howey analysis memo in 2018, there was no recommendation for enforcement action or even a suggestion to send a cease-and-desist letter to Ripple to halt the sale of XRP.
Moreover, Deaton highlighted that Hinman had once testified under oath that the SEC does not need to demonstrate or satisfy all elements of the Howey test for a transaction to be classified as an investment contract. The Howey test is a legal standard used to determine what constitutes an investment contract under U.S. securities laws.
SEC Faces Controversy Following Ripple Case
The SEC has faced multiple controversies after its loss in the Ripple case. The regulatory body has also been criticized by various groups for its actions against cryptocurrency entities on charges related to money laundering and Know Your Customer (KYC) regulations.
In support of John Reed Stark’s comments, Deaton stated that while SEC staff employees are not political, the heads of the commissions are. Deaton explained in a Twitter post that individuals who lead entire divisions, such as Corporation Finance, are not always selected based on their knowledge or experience. Instead, they may be chosen due to their connections and potential to help or harm others once in power. Deaton cited Hinman as a prime example of this phenomenon.
In conclusion, the Ripple lawsuit has raised questions regarding the SEC’s decision-making procedures and the influence of specific individuals within the organization. As discussions persist, it is yet to be determined how the SEC will respond to these issues and if it will implement measures to enhance transparency and equity in its actions.
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