Top Ripple lawyer Stuart Alderoty has shed light on the SEC impartiality as the legal tussle between the two entities continues. The spotlight exposes some potential inconsistencies with the regulator’s position on digital assets.
The lawyer took to his Twitter page to talk about the impartiality regulations that guide the Commission, posing the possibility of prejudice in the Commission’s views on certain digital assets.
Alderoty pointed out an outline 5 CFR 2635.101(b)(14) in federal laws which requires all SEC employees similar to all federal employees to “act impartially” and also show an appearance of impartiality.
The law requires SEC employees, like all federal employees, to act (and appear to act) impartially. The law asks: Would a reasonable person, knowing the facts, question the employee’s impartiality.
You now know the facts.
5 CFR 2635.101(b)(14)
— Stuart Alderoty (@s_alderoty) June 20, 2023
According to the law, the question is “Would a reasonable person, knowing the facts, question the employee’s impartiality.” His comment comes after the Hinman emails were made publicly available. The email shows a number of exchanges between Hinman, and members of the SEC staff in preparation for a June 14, 2018 speech. The emails talked about how different digital assets might be classified.
The crypto community reacted negatively to Hinman’s claim that the two biggest cryptocurrencies were not securities in his opinion. Some others hypothesized that the emails would show that the SEC had a bias in favor of Bitcoin and Ethereum.
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The email shows discussions within the regulatory body in preparation for its official speech. Also included in the email is the application for the Howey Test which determines the classification of securities under the United States law.
Meanwhile, Hinman’s emails were made public amid the ongoing lawsuit with Ripple. The lawsuit accused Ripple of offering unregistered securities in XRP to the public.
However, Ripple has been defending its position in court asserting that it has not broken any federal laws. The legal team for Ripple has requested access to these emails as part of its defense plan. In addition, Alderoty’s tweets highlight Ripple’s worries and highlight potential flaws in the SEC’s approach to cryptocurrency regulation.