Gene Hoffman, chief operating officer at blockchain company Chia Network, believes Ripple will lose against the Securities and Exchange Commission (SEC).
Hoffman made the prediction in a tweet, noting an excerpt from the SEC’s summary judgment filing where the regulator argued that its former director of corporate finance, Bill Hinman, told Ripple executives back in 2019 that in his opinion, XRP was a security.
Did you know that Bill Hinman told Ripple leadership that XRP was a security in his opinion in 2019? Neither did I… Prepare for the post Ripple SEC loss future https://t.co/MmD79MRL5l pic.twitter.com/yykUsTVSfY
— Gene Hoffman hoffmang.xch
(@hoffmang) December 5, 2022
Hoffman, a former public company CEO, says that aside from the Hinman statement, the federal judges are also sceptical enough to know that most people bought XRP, hoping the numbers would go up.
Based on this, he maintained that the only outcome from the case is that a judge will rule that Ripple’s sales of XRP made XRP a security and XRP proponents’ argument that the token has utility will not fly.
He also asserted that there is little difference between XRP in the Ripple case and the LBRY Credits (LBC) tokens in the LBRY case in which the SEC just recently won a favourable ruling. According to Hoffman, the SEC has not lost a section 5 violation case in a long while.
XRP aficionados still confident of a win against the SEC
Hoffman’s take has been met with stiff opposition from the XRP community. According to attorney John Deaton, Hoffman is taking the excerpt out of context as it refers to a personal opinion of Hinman and not the opinion of the SEC.
Deaton explains that shortly after the meeting in which Hinman made the statements the SEC is referring to, securities enforcement lawyers at the commission produced an XRP Howey Test Memo.
The XRP community knows that this memo did not conclude that XRP was a security as Hinman again had an opportunity to meet with Ripple executives and did not provide definitive advice on whether or not XRP was a security, Deaton asserted.
“Certainly, if the XRP Howey Memo had concluded XRP is a security, Clayton & Hinman would’ve informed [Brad Garlinghouse] & [Joel Katz] that it was a security when Garlinghouse spoke out about purgatory. They would’ve said ‘XRP is a security and that’s why it wasn’t given clarity,’” Deaton wrote.
The crypto space is following the case closely as it enters the final stages. With both the SEC and Ripple recently filing motions for summary judgment, a conclusion of the case is expected from the judge in the next few months.
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