The U.S. Securities and Exchange Commission (SEC) has released its long-awaited internal documents related to former commissioner William Hinman’s speech on digital assets in 2018. 

The reveal incited fury from Ripple CEO Brad Garlinghouse, who has now accused the SEC of willingly throwing “an entire industry into chaos” by releasing the speech. 

Hinman Ignored All Warnings

According to now publicly available emails from the SEC, the agency warned Hinman multiple times that the wording of his speech could create confusion in the market about why he or the SEC might believe Ether (ETH) is not a security.

“As written, it may not be apparent to the reader which characteristic or factor weigh against it being a security or not,” wrote one of the agency members about the speech. 

Released in June 2018, Hinman’s speech provided an “illustrative list” of which factors the SEC might consider when determining whether a digital asset is a security. 

Certain agency members criticized the chairman for not tying his criteria “more closely and explicitly to the Howey analysis” – a standard for classifying investment contracts often cited by SEC Chairman Gary Gensler today. 

Others noted that the speech was “ambiguously worded,” and seemed to include factors that weren’t clearly relevant to securities laws at all – such as whether an asset can be “hoarded.”

Hinman’s speech is central to the SEC’s ongoing lawsuit against Ripple, alleging that the sale of XRP beginning in 2013 constituted an unregistered securities offering. Ripple asserts that Hinman’s speech describing Ether as a commodity would also rule out XRP from being a security since it was sold in a similar fashion. 

Ripple’s Response

After the reveal, Ripple’s Chief Legal Officer Stuart Alderoty called for Hinman’s speech to be removed from the SEC’s website, and never again be invoked in discussions about whether an asset is a security.