The US Securities and Exchange Commission (SEC) has officially admitted that they did not inform any third parties that XRP was security until they pressed charged against Ripple Labs, the company behind XRP.
…the Commission admits that before the filing of this case certain third parties inquired about the legal status of XRP. However, the Commission did not state a view one way or the other in response.
This admission overturned William Hinman’s — the former director of the SEC’s Division of Corporation Finance — testimony that he had advised Ripple to stop selling XRP as the token is considered security. The contradiction has certainly placed Hinman in a tight spot, and may cost him more than just the SEC.
An article by Clayton Hinman Facts said that a federal judge repeatedly ordered the SEC to produce the documents and external communications related to Hinman’s June 14, 2018 declaration that Ethereum is not a security. The article remarked that the SEC was reluctant to produce them as they would poke holes into the SEC’s argument.
The fair notice defense focuses on whether the SEC has given Ripple a heads-up about how the sales of XRP were considered sales of securities. Without a fair notice, it is understandable that Ripple would assume that XRP would be treated the same as Ethereum and Bitcoin, both of which are not considered securities. This would cause Ripple to inadvertently breach the securities law.
