William Hinman, the former director of the corporate finance department of the US Securities and Exchange Commission, told Ripple that the sale of XRP should be stopped because he believed that cryptocurrency was an unregistered security.

Ripple Warned to Stop Selling XRP

In his testimony, the former U.S.Securities and Exchange Commission official claimed that he warned the San Francisco-based company it must stop selling to comply:

“Frankly, the one I recall the most clearly is probably the one when XRP came in with a person who had my position before me, as well as enforcement counsel. They were interested in whether there a way to restructure what we’re doing to bring it into compliance with the securities laws, and the first thing I said to them was that you’re continuing to offer XRP without any kind of restrictions that would apply as a securities offering.”  

If you want to come into compliance you have to stop doing that, and they understood that.

The US Securities and Exchange Commission claimed Ripple could not find any evidence of suspected market chaos that is at the core of the company’s fair notification defence.

Due to the high level of public interest in the case, Hinman’s testimony was controversial after the court made an unorthodox approval decision on July 27, and part of it has now been made public.

The SEC wants Hinman’s Deposition Censored and Sealed

In a motion filed on Tuesday, August 17, regulators asked New York Judge Sarah Netburn to approve his motion to have the Privilege Protocol sealed. According to the regulator, the Privilege Log  “provides significant detail regarding which SEC employees communicated with other SEC employees, on which specific topics, and at which specific times. This information about particular government employees and their communications is sensitive and could potentially be exploited for improper purposes.”

Regulators are particularly concerned about Hinman’s statement. The SEC requested an alteration to the testimony as it “the identities of and information about third parties-Director Hinman’s current or former clients and third parties that discussed their business plans with the SEC as they related to the federal securities laws.”

Not everyone is happy with this, and attorney John Deaton sums it up by saying that the US Securities and Exchange Commission “literally will have a deterrent effect on public services.”