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XRP holder’s lawyer, John Deaton has shared his thoughts on the newly released Hinman Emails, quoting the tweet shared by Coinbase Exchange’s Chief Legal Officer, Paul Grewal.
The tweet from Grewal contained the screenshot of a portion of the documents that highlighted a “regulatory gap” in which an asset can be excused from being tagged as a security if there’s no controlling entity to hold onto in the case of a decentralized entity and is still required to register to fulfill an obligation to protect investors.
Grewal noted that the clause underpinning the regulatory gap is what the trading platform had been telling the US SEC, Congress and the Third Circuit Court respectively. John Deaton, known for his insightful commentary on the case noted that the regulatory gap can help the fair notice defense on the part of Coinbase, Ripple and other digital currencies the SEC might be going after.
The Hinman emails help @coinbase, #ETH and @Ripple’s fair notice defense. How much it helps anyone in a courtroom is yet to be seen. But in the Court of Public Opinion and in Congress, the emails should help drive attention to how hypocritical and reckless the SEC is being. https://t.co/kdYOSsh2RX
— John E Deaton (@JohnEDeaton1) June 13, 2023
The use of fair notice defense is centered around an argument that the defendants which in this case is Coinbase operated its products and lacked fair notice from the SEC to show its alleged services, like staking violates the securities law.
Recall that Coinbase exchange was sued by the SEC last week as the regulator alleged that it supported the trading of unregistered securities while also offering its staking product that is deemed a security.
Crypto Lawyer on the Court of Public Opinion
With the turn of events, the crypto lawyer is optimistic that in the court of public opinion and the US Congress, attention will be driven to how reckless and hypocritical the SEC is being in its handling of the nascent crypto ecosystem.
The ongoing discovery of details in the Hinman Emails have already gotten tongues wagging as it was revealed that Ethereum was notably more favored than other cryptocurrencies by the regulators in its early days.
Despite the digital currency being distributed to the public through an Initial Coin Offering (ICO), the SEC at the time still labeled it a non-security while XRP was tagged one, a move that has fueled the legal battle between the commission and Ripple Labs Inc to date.
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