Who is William Hinman?

at the bottom of the page Hinman talks about bit coin

 “Can a digital asset that was originally offered in a securities offering ever be later sold in a manner that does not constitute an offering of a security?” In cases where the digital asset represents a set of rights that gives the holder a financial interest in an enterprise, the answer is likely “no.” In these cases, calling the transaction an initial coin offering, or “ICO,” or a sale of a “token,” will not take it out of the purview of the U.S. securities laws.

Former SEC Officials Clayton and Hinman Open Bitcoin/Ethereum Mining Farms

Hinman served as director of the SEC’s division of corporation finance from May 10, 2017 to Dec. 11, 2020 and held a position of critical importance to the SEC’s operations, Stewart wrote. The SEC filed its lawsuit against Ripple days later on Dec. 22, 2020, alleging that its sale of XRP was an unregistered securities offering worth over US$1.38 billion. The SEC also named Ripple’s CEO Brad Garlinghouse and executive chairman Chris Larsen as co-defendants for allegedly aiding and abetting Ripple’s violations.

Before serving at the SEC, Hinman was a partner and practiced in the corporate finance group in the Silicon Valley office of Simpson Thacher & Bartlett LLP, where he played a role in the initial public offerings of major tech companies, including Alibaba, Facebook, Google and Square. He has returned to the law firm as a senior advisor. 

In May, Hinman joined &vest, an investment platform founded in 2019 focused on SPACs and private investments, as a partner. This week, Silicon Valley venture capital firm Andreessen Horowitz (a16z) announced its new US$2.2 billion crypto fund and that Hinman was joining.

a16z crypto as an advisory partner. “Bill will provide valuable insights to us and our portfolio companies as well as play a key role in shaping the future regulatory environment in which we and they operate,” according to a16z’s statement

Hinman has been frequently cited in the litigation because of a speech he made in 2018 titled “Digital Asset Transactions: When Howey Met Gary (Plastic)” where he said Bitcoin and Ether were not securities. Ripple has said that it had understood those remarks to indicate that the SEC “would permit present-day sales of virtual currencies given the current market conditions for XRP.”

Now Hinman is distancing his remarks from the SEC. In his declaration filed in support of the SEC’s motion to squash the deposition subpoena, Hinman said: “I began the speech with the following disclaimer: ‘My remarks are mine alone, not necessarily those of the Commission, the Commissioners, or the staff.’ The text of the Speech, which is publically available on the Commission’s website, contains a similar disclaimer: ‘The Securities and Exchange Commission disclaims responsibility for any private publication or statement of any SEC employee or Commissioner. This speech expresses the author’s views and does not necessarily reflect those of the Commission, the Commissioners or other members of the staff.’”

But James Filan, a defense lawyer and former federal prosecutor who frequently comments on developments in SEC v. Ripple lawsuit, tweeted: Former SEC chair Jay “Clayton used Hinman’s speech as an example of how transparent the SEC has been in its treatment of digital assets but now Hinman is tap-dancing in that declaration.”

See related article: Court grants Ripple access to SEC’s internal trading policies on XRP

William Hinman Talking about Bitcoin

Hinman I look at Bitcoin today, I do not see a central third party whose efforts are a key determining factor in the enterprise. The network on which Bitcoin functions is operational and appears to have been decentralized for some time, perhaps from inception. Applying the disclosure regime of the federal securities laws to the offer and resale of Bitcoin would seem to add little value.[9] And putting aside the fundraising that accompanied the creation of Ether, based on my understanding of the present state of Ether, the Ethereum network and its decentralized structure, current offers and sales of Ether are not securities transactions. And, as with Bitcoin, applying the disclosure regime of the federal securities laws to current transactions in Ether would seem to add little value. Over time, there may be other sufficiently decentralized networks and systems where regulating the tokens or coins that function on them as securities may not be required. And of course there will continue to be systems that rely on central actors whose efforts are a key to the success of the enterprise. In those cases, application of the securities laws protects the investors who purchase the tokens or coins.

I would like to emphasize that the analysis of whether something is a security is not static and does not strictly inhere to the instrument.[10] Even digital assets with utility that function solely as a means of exchange in a decentralized network could be packaged and sold as an investment strategy that can be a security. If a promoter were to place Bitcoin in a fund or trust and sell interests, it would create a new security. Similarly, investment contracts can be made out of virtually any asset (including virtual assets), provided the investor is reasonably expecting profits from the promoter’s efforts.