All along, the XRP team has maintained that the cryptocurrency should not be treated as a security, citing the ex-SEC official’s comments on ETH.
On Thursday, US Magistrate Judge Sarah Netburn ruled that Ripple should go ahead and depose Hinman. The judge ruled that Hinman held “substantial authority” at the SEC but that questioning him would “open the floodgates” for similar developments.
The judge noted in her ruling that the case against Ripple and two of its executives were of a “significant” policy nature, involved huge amounts of money and that there is a lot of public interest in it.
SEC opposed deposition
The SEC’s lawsuit against Ripple, filed in December 2020, accused Ripple Labs of conducting an illegal sale of unregistered securities. It also accused Ripple CEO Brad Garlinghouse and executive Chairman Chris Larsen of having benefited millions from the sale of XRP.
Ripple has denied all of the charges and accusations, and last week re-notified the court of their decision to depose Hinman on 19 July 2021 as part of building their response against the regulator’s accusations.
But the securities watchdog opposed the deposition, stating that Hinman’s views about ether and bitcoin were made in his capacity. However, lawyers for the blockchain company say that the ex-director’s testimony is key to their case as they bid to have the SEC disclose how they concluded that ether and bitcoin were not securities, yet XRP was.
Ripple has also claimed “unfair” treatment on the side of the securities regulator as it did not offer adequate “notice” regarding its plans to declare XRP as a security.
The court’s ruling now gives Ripple Labs the chance to question Hinman, though that will not now happen on the 19 July as earlier scheduled. This follows Judge Netburn’s decision to allow the two parties a week to agree on the nature of the deposition.