Ethereum Could Benefit From XRP’s SEC Case, Here’s Why

Since Saturday, Ethereum (ETH) has dropped from the $1,838 level to the current level of $1,738 while XRP has traded sideways. This has prompted alarm among Ethereum investors and dealers. However, experts and analysts feel that the recent exposure of the Hinman documents on June 13th may herald a period of relief for the price of Ethereum.

The Hinman documents are a collection of emails and memos from William Hinman, former director of the Securities and Exchange Commission’s (SEC) Division of Corporation Finance, that were recently made public. The Hinman records contain a sequence of emails and memos from the former SEC director, who declared in 2018 that Ether, Ethereum’s native cryptocurrency, is not a security.

Ethereum Traders Should Keep An Eye On The XRP Case

The recent publication of emails relating to Ethereum from former SEC official William Hinman has generated a stir in the cryptocurrency sector. While some have claimed that the documents represent proof of the cryptocurrency’s existence, others have dismissed their relevance.

According to analyst Adam Cochran, the records present a nuance that puts Gary Gensler in a pickle. Hinman sought to clarify the SEC’s stance on digital assets such as ETH and XRP and their relationship to security requirements. During his lecture, Hinman attempted to understand the nuanced intent of investors versus users.

SEC staff expressly stated to him that they intended to move to the subject of “what is a security” rather than the concept of morphing. And that their worries stemmed from inconsistencies between the Securities Act and the Exchange Act.

Hinman emphasized that “promoters” have a very specific legal analysis point – and that even a coordinated group of players working on something would not get to the threshold of being designated the promoter if their efforts were not essential.

The memo on Ethereum, which came after a meeting with Ethereum founder Vitalik Buterin and his lawyers, stated that Ethereum was not secure at the time and that secondary sales raised mainly Exchange Act and Commodities Act issues.

That footnote, according to Cochran, is extremely important because it indicates that the SEC internally saw secondary transactions as not being sales of the promoter at the time. Furthermore, Cochran feels the records are damaging to Gensler’s stance since they embrace the concept of asset reverse-morphing’ into security. Assume the SEC wishes to argue that Ethereum is currently a security. 

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