SEC Staff Emails Reveal XRP Failed Howey Test, Questioning SEC’s Allegations

In this post:

  • Newly revealed SEC staff emails suggest that Ripple’s XRP may not meet the criteria to be considered a security, contradicting the SEC’s allegations.
  • The court’s decision to make documents related to the Hinman Speech public could provide insights into why Ether was classified as a non-security

In a dramatic twist to the ongoing legal battle between Ripple Labs and the U.S. Securities and Exchange Commission (SEC), newly revealed SEC staff emails have raised questions about the regulatory agency’s allegations against Ripple’s XRP cryptocurrency. Attorney John Deaton, who represents XRP holders, brought attention to a footnote in Ripple’s court briefs, which suggests that XRP may not satisfy the Howey Test and, therefore, should not be considered a security. 

The revelation has sparked concerns about the SEC’s actions and their alignment with their own staff’s analysis. Additionally, the court’s decision to reject the SEC’s motion to seal documents related to the Hinman Speech has heightened anticipation within the cryptocurrency industry, as these memos could provide insights into why Ether (ETH) was deemed not to be a security.

Footnote Raises Doubts on XRP’s Security Status

Attorney John Deaton’s intervention in the Ripple lawsuit has brought attention to a significant footnote within Ripple’s opposition and reply briefs submitted to the U.S. District Court for the Southern District of New York. The footnote suggests that there are reasonable grounds to conclude that XRP does not meet all the elements of the Howey Test, which is used to determine whether an asset qualifies as a security under federal securities law. 

This development challenges the SEC’s position that XRP is a security and raises concerns about why the agency pursued charges against Ripple executives despite its own staff analyzing XRP as not meeting the criteria for security. The attorney further points out that an exhibit from SEC emails, numbered 230, indicates that it is “more likely than not” that XRP will not be considered a security and, therefore, should not be subject to regulatory oversight by the SEC. The exhibit in question, part of the SEC emails, contradicts the charges brought against Ripple. 

Moreover, Deaton highlights that the SEC’s enforcement lawyers had analyzed XRP back in June 2018 but did not recommend any enforcement action, including issuing a cease and desist letter to halt XRP trading. These revelations raise crucial questions about the SEC’s decision-making process and the consistency of its actions regarding XRP.

Court Rejects SEC’s Attempt to Seal Hinman Speech Documents

In another significant development, the U.S. District Court rejected the SEC’s motion to seal documents and emails related to the infamous Hinman Speech. Former SEC Director of Corporation Finance, Bill Hinman, delivered the speech in 2018, stating that Ether (ETH), the native cryptocurrency of the Ethereum network, should not be considered a security. The court’s decision means that these documents will soon be available to the public, offering insights into the SEC’s reasoning behind Hinman’s classification of Ether.

The exposure of the Hinman Speech memos is highly anticipated within the cryptocurrency industry. This transparency will not only provide clarity on the SEC’s perspective regarding Ether but may also guide market participants and regulators in understanding the SEC’s approach to determining whether a cryptocurrency should be classified as a security. The outcome of this disclosure could have far-reaching implications for the crypto industry, shaping future regulatory decisions and offering precedent for other cryptocurrencies seeking legal clarity.


The ongoing Ripple lawsuit takes a surprising turn with the revelation of SEC staff emails suggesting that Ripple’s XRP cryptocurrency did not meet the criteria to be classified as a security under the Howey Test. Attorney John Deaton’s highlighting of a footnote in Ripple’s court briefs challenges the SEC’s allegations and raises questions about the regulatory agency’s actions.

Disclaimer. The information provided is not trading advice. Cryptopolitan.com holds no liability for any investments made based on the information provided on this page. We strongly recommend independent research and/or consultation with a qualified professional before making any investment decisions.

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