According to Hinman’s talk, ETH is not a security. Whether the speech’s phrasing will be as relevant as the firm says remains to be seen, but Ripple Labs believes it is a crucial piece of evidence in the lawsuit the SEC has launched against it, charging that sales of Ripple’s XRP violated U.S. securities laws. Many questions remain unanswered about what led up to Hinman’s speech and the circumstances around it.

Since Judge Sarah Netburn’s ruling found that the speech was not covered by deliberative process privilege, as the SEC had claimed, Judge Torres’ decision overturned SEC objections to disclosing the records. After the SEC argued the materials were protected by attorney-client privilege, Netburn ruled against them in July. Despite the SEC’s protests, Judge Torres sided with the plaintiffs.

After Ripple Labs utilized its cryptocurrency XRP to acquire capital in 2013, the SEC launched a lawsuit against the business, its CEO Brad Garlinghouse, and its former CEO Chris Larsen in December 2020. The outcome of an SEC lawsuit has the potential to create a new legal standard.

Initially, it seemed that the lawsuit was not going well for Ripple, but the business has now used several defense methods. On September 17th, applications for summary judgment were submitted in the U.S. Court for the Southern District of New York by Ripple Labs and the SEC.

The post The SEC Is Ordered to Provide Ripple Labs with Hinman Papers appeared first on Crypto Market Insights: Dive In with CryptoUpdate.io.

In a possibly unprecedented move hidden in the lawsuit’s 69th line, the SEC today claimed it has the power to prosecute Balina not just because his case involves US transactions, but also because the whole Ethereum network comes under US government jurisdiction.

In its complaint, the agency observed that the ETH delivered to Balina was confirmed by an American network of Ethereum blockchain nodes.
The SEC finds that these transactions occurred in the U.S.

The SEC seems to propose that since more Ethereum validating nodes are in the US than in any other area, all Ethereum transactions should be deemed American.
Etherscan says 45.85% of Ethereum nodes are in the US.
Germany’s second-highest node density is 19%.

If the SEC classifies Ethereum behavior as similar to that of an American securities market, it would claim authority over all activity on the purportedly decentralized Ethereum network.
It would increase the SEC’s oversight over Ethereum, where most NFT and DeFi activity occurs, and crypto in general.

SEC Chair Gary Gensler said last week, after Ethereum’s successful migration to proof-of-stake, that the shift may bring the network closer to the definition of security.

Gensler spoke before the Senate Banking Committee on how “staking” (pledging assets to a crypto network in return for passive benefits) may be regarded as a signal that an asset qualifies as a security under the Howey Test. He did not specify any particular cryptocurrency or network.

Under Gensler, the SEC has not taken an official position on Ethereum, despite prior leadership stating it was “sufficiently decentralized” and not a security.

The post SEC Asserts That All Ethereum Is Subject to US Law appeared first on Crypto Market Insights: Dive In with CryptoUpdate.io.