Attorney John Deaton, a prominent observer of the Ripple-SEC case, has drawn attention to the “XRP Howey Memo,” an internal 2018 SEC document. This memo, received by former SEC chairman Jay Clayton and William Hinman, refrained from definitively addressing XRP’s regulatory status or recommending enforcement actions against Ripple, its CEO Brad Garlinghouse, or co-founder Chris Larsen.
In a notable speech on June 14, 2018, Hinman discussed the status of cryptocurrencies, stating that Bitcoin and Ethereum were not securities. However, XRP was conspicuously absent from his speech, leading to confusion and questions about its regulatory standing.
Deaton mentioned possessing notes from a private meeting with Hinman’s Special Counsel. These notes shed light on Ripple’s interactions with senior SEC staff, highlighting discussions about XRP’s regulatory status, its absence from Hinman’s speech alongside Bitcoin and Ethereum, and reminders of XRP’s early interactions with agencies. The SEC was aware of Ripple’s compliance efforts and its FinCEN settlement.
Ripple’s CEO expressed dissatisfaction with the regulatory uncertainty compared to Ethereum’s handling. The “XRP Howey Memo,” published a couple of months earlier, focused on XRP’s securities alignment.
Deaton suggested that Clayton and Hinman’s perspectives might have shifted if XRP were classified as a security. Clayton recommended discussing Ripple’s business model with SEC staff.
The insights from the “XRP Howey Memo” and the SEC meeting notes have added complexity to Ripple’s legal battle, raising implications for the broader cryptocurrency industry.
