The Hinman Deposition: A Review of What We Deserve to Know

In a recent deposition, the CEO of JPMorgan Chase, Jamie Dimon, was asked about bitcoin. The transcript is only one side of the story and has been widely discussed by mainstream media.

The hinman deposition transcript is a document that was released by the SEC in 2018. It is an overview of what happened during the Hinman Deposition, which took place on December 4th, 2018.

CryptoLaw’s Founder and Host, John E. Deaton

Magistrate Judge Sarah Netburn will conduct a hearing tomorrow (Thursday, July 15) to decide whether to approve the SEC’s request to suppress the deposition of former SEC Division of Corporation Finance Director William Hinman. During tomorrow’s hearing, the judge may even make an order on this crucial subject.

The agency claimed in its petition to reject the deposition and prohibit Hinman from appearing under oath that Ripple and executives Brad Garlinghouse and Chris Larsen could not show the “exceptional circumstances” required to compel Hinman’s testimony. An study of the facts, on the other hand, reveals a completely different picture. Hinman is no longer a high-ranking government official, for starters. He is an individual who lives in his own home. Simpson Thacher would surely give Hinman enough time off to answer some questions after spending millions of dollars in him while he was at the SEC.

If William Hinman is allowed to speak under oath, here is a short, but not comprehensive, rundown of what XRP holders, crypto holders, and investors in general need to know:

  1. Ethereum, Simpson Thacher, and a Bank Account Filled with Millions of Dollars: Hinman was a partner at Simpson Thacher, a legal firm that sits on the Enterprise Ethereum Alliance, a consortium of companies dedicated to the business case for the Ethereum blockchain, before and after his time at the SEC. In a speech that is still accessible on the SEC’s website, Hinman stated in 2018 that “offers and sales of ether are not securities transactions,” sending the cryptocurrency’s value skyrocketing. While at the SEC, Hinman got millions in compensation from the company, including when he prepared and made those comments. If there was no obvious conflict of interest, he must explain himself on oath. Hinman’s own financial interests were obviously linked to the speech he made, according to the evidence.
  • Hinman’s ETH Speech and Ethereum Classic’s Coinbase Listing: Coinbase announced the listing of Ethereum Classic on its exchange three days before the crucial Hinman speech on ether in 2018, an asset split from the Ethereum blockchain that was generally expected to be deemed a security, like ether itself. (After all, Ethereum was launched as an ICO in 2014.) This sparked speculation among experts at the time about whether the SEC had secretly informed Coinbase or the Ethereum Foundation about Hinman’s impending announcement. Is it possible that the SEC forewarned Hinman’s Simpson Thacher colleagues before the market heard his speech? Let’s hear his responses when he’s under oath.
  • Meeting with the Ethereum Foundation by Hinman Following the ETH Speech: During the discovery process, Ripple seems to have compelled Hinman to acknowledge that following his 2018 ETH lecture, he met with the Ethereum Foundation, Consensys, and other key market players. (While the redactions in the July 1 filing don’t confirm it, the remainder of the document clearly suggests it.) Why wasn’t the market aware of this earlier? Did the guy in charge of no-action letters on cryptocurrency offers have a secret conversation with these important market players about his ETH speech? Did they talk about competing coins? Let’s have him go through all of those discussions with us under oath.
  • And what about the whole thing? “This is just a personal opinion, not policy.” Nonsense: Hinman’s and the SEC’s actions before, during, and after the notorious ETH speech all showed that they were well aware that the speech would impact markets. The headlines in major business publications plainly stated that ETH is not a security, according to a senior SEC employee. Hinman never corrected the record in any media interview or public appearance that I could find, and neither Coinbase’s actions three days before the speech nor Hinman’s communications with market participants after the speech pointed to anything other than a policy statement from the SEC’s official in charge of no action letters. In a lecture at Georgetown University School of Law later that year, he said unequivocally that his ETH address “got a lot of attention because it was the first time we had conveyed to the public that we didn’t regard ether as a security.” At Georgetown, he made no attempt to clarify that “we” meant William Hinman. We just meant the Securities and Exchange Commission. To properly create a credible image of how this market-shaking statement was simply his view as a private citizen, Hinman has to be questioned extensively under oath about all the circumstances leading up to the ETH speech — and thereafter.

The SEC argued that Hinman “did not have unique first-hand knowledge of “what was going on in the [Crypto] market” in a desperate attempt to save him from being deposed. However, these facts alone go to the core of Hinman’s crucial role in providing Ethereum with the rocket fuel it needed to send its token to the moon, all while earning millions of dollars from an Ethereum-connected legal firm. He and/or the SEC may have informed an exchange ahead of time of his ETH speech, leaving other market players in the dark. Now, both Hinman and the SEC want us to think that the ETH speech should never have been taken as policy or as any type of warning regarding ETH’s status, just as the SEC claimed in the Ripple lawsuit in December 2020 that we should have all known XRP was a security since 2013.

In federal court, a deposition is restricted to seven hours. According to government records, Hinman earned more than $15 million in payments from Simpson Thacher during his four years at the SEC:

Following the SEC’s lawsuit against Ripple, investors lost nearly $15 billion. Is a seven-hour deposition unreasonable? Hinman and the SEC, whose job is to safeguard investors, seem to believe so.

Subpoenaing a former high-ranking official for a deposition to account for his conduct while in office is a huge thing. Judge Netburn isn’t joking around when he asks this question. But when such acts were so obviously relevant to the fundamental issues at issue in a case as large and precedent-setting as SEC v. Ripple, it’s a pretty strong reason to reject the SEC’s efforts to shade Hinman and keep the entire truth hidden.

The Hinman Deposition is a document that was released in April 2018. It is a review of what we deserve to know about the XRP project and its creator, Jed McCaleb. Reference: hinman xrp.

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