January 25, 2021

Via Email and Federal Express

Freedom of Information Act Officer

Securities and Exchange Commission
100 F Street NE
Washington, DC 20549
Email: foiapa@sec.gov

Re: Freedom of Information Act Request for Records Relating to the Ether
Determination and Letters Regarding Chinese Control of Cryptocurrencies

Dear Sir or Madam:

This letter constitutes a request (“Request”) pursuant to the Freedom of Information Act,
5 U.S.C. § 552 et seq. (“FOIA”) and implementing regulations, 17 C.F.R. § 200.80 et
seq., Ripple, through its undersigned counsel, submits this Request.

I. Background

A. Determination that ether was not a security.

Originally conceived by Vitalik Buterin, ether is the native digital asset of the Ethereum
blockchain. Buterin published the Ethereum Whitepaper in 2013, endeavoring to create
an “alternative protocol for building decentralized applications.”1 Ether is necessary to
perform any actions on the Ethereum network, as using an Ethereum application or
sending ether on the blockchain requires the payment of a small fee in ether.2 In the
Ethereum system transactions are monitored by miners, who receive payment in small
amounts of newly-issued ether.3

Since July 2014, the Ethereum ecosystem has been supported by the Ethereum
Foundation, a non-profit organization which claims to be “one part of a much larger
ecosystem” that funds development of Ethereum-related technologies.4 Through the
Ecosystem Support Program, the Ethereum Foundation gives grants to support projects
such as Uniswap, an automated market maker, or ethers.js, a JavaScript library designed

1
Ethereum Whitepaper, https://ethereum.org/en/whitepaper/ (last visited Jan. 12, 2021).
2
What is Ether (ETH)?, https://ethereum.org/en/eth/ (last visited Jan. 12, 2021).
3
Id.
4
About the Ethereum Foundation, https://ethereum.org/en/foundation/ (last visited Jan. 13, 2021); see also
Ethereum Foundation, Crunchbase https://www.crunchbase.com/organization/ethereum.
to interact with Ethereum.5 The Ethereum Foundation provides “financial and non-
financial support” to the Ethereum community “in order to accelerate the growth of the
ecosystem.”6 The website of the Ethereum Foundation, ethereum.org, educates the
public about ether and directs visitors to where ether can be purchased.7

From July 22, 2014 to September 2, 2014, Buterin and the Ethereum Foundation
conducted a fundraising sale of “premined” ether tokens.8 The ether purchased was not
usable or transferable by purchasers at the time of sale; instead, purchasers had to wait
until the launch of Ethereum on July 30, 2015, 9 in order to use the asset.10 The ether was
sold by the Ethereum Foundation at a discounted price during the forty-two day
fundraising sale.11 The Ethereum Foundation sold 60 million ether to the public and
raised more than $18.3 million.12 Twelve million ether was given to the Ethereum
Foundation and other participants of the Ethereum ecosystem.13 The 72 million ether that
was either sold to the public prior to the launch of the Ethereum blockchain or provided
to the Ethereum Foundation has a market value today of over $95 billion and represents
the majority of ether currently trading in the secondary market.

In addition to the Ethereum Foundation, ConsenSys is a private company founded in

October 2014 by Ethereum co-founder Joseph Lubin to focus on further development and
advancement of the Ethereum software.14 ConsenSys’ mission is to “enable[] developers,
enterprises, and people worldwide to build next-generation applications, launch modern
financial infrastructure, and access the decentralized web.”15 To Ripple’s knowledge, the
amount of ether held by either ConsenSys or Mr. Lubin is not publically available.

5
Featured projects, Ecosystem Support, https://esp.ethereum.foundation/en/projects/ (last visited Jan. 19,
2021).
6
Id.
7
Where to buy ETH, https://ethereum.org/en/get-eth/ (last visited Jan. 13. 2021).
8
See Vitalik Buterin, Launching the Ether Sale, Ethereum Blog (July 22, 2014),
https://blog.ethereum.org/2014/07/22/launching-the-ether-sale/.
9
Stephan Tual, Ethereum Launches, Ethereum Blog (July 30, 2015),
https://blog.ethereum.org/2015/07/30/ethereum-launches/.
10
Id.
11
Id.
12
Kate Rooney, Ethereum falls on report that the second-biggest cryptocurrency is under regulatory
scrutiny, CNBC (May 1, 2018), https://www.cnbc.com/2018/05/01/ethereum-falls-on-report-second-
biggest-cryptocurrency-is-under-regulatory-scrutiny.html.
13
The Ethereum Foundation retained 6 million for operational costs, 3 million was given to 85 developers
who contributed to the Ethereum Project, and 3 million was given to the Developer Purchase Program
which enabled some members of the Ethereum Foundation to buy ether at the initial crowdsale price. An
Introduction to Ethereum, Grayscale Building Blocks (Feb. 2020), https://grayscale.co/wp-
content/uploads/2020/02/Grayscale-Building-Blocks-Ethereum-February-2020.pdf.
14
See About Us, ConsenSys, https://consensys.net/about/ (last visited Jan. 20, 2021); ConsenSys,
Crunchbase, https://www.crunchbase.com/organization/consensus-systems.
15
Year in Review 2020, ConsenSys, https://consensys.net/year-in-review-2020/.

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ConsenSys has adopted a “hub-and-spoke” model, in which ConsenSys functions as the
central “hub” that “spawns, incubates, and accelerates” various ventures (the “spokes”),
which create new products and services built on the Ethereum blockchain with the benefit
of certain “foundational components built by ConsenSys.”16

In June 2018, then-Director of the Division of Corporation Finance William Hinman

announced that, in his view, ether was not a security in its current state.17 “Putting aside”
the fundraising undertaken by the Ethereum Foundation a few years ago and “based on
[his] understanding of the present state of Ether, the Ethereum network and its
decentralized structure, current offers and sales of Ether are not securities transactions.”18
In comparing ether to bitcoin, Director Hinman stated that “applying the disclosure
regime of the federal securities laws to current transactions in Ether would seem to add
little value.”19

We are not aware of other public statements by the Commission nor Director Hinman
further explaining the rationale behind the view that ether was not a security. Today,
ether is the second-largest cryptocurrency by market capitalization, after bitcoin.20

B. Letters regarding Chinese control of bitcoin and ether.

Multiple news outlets have reported on letters that former SEC Chairman Clayton
received regarding national security-related concerns over China’s control of bitcoin and
ether, both digital assets that the SEC has declared are not securities.

1. November 2020 Letter from Director of National Intelligence John

Ratcliffe to Chairman Clayton

In November 2020, Director of National Intelligence John Ratcliffe reportedly wrote a

letter to Chairman Clayton raising concerns over China’s influence over digital
currency,21 including that more than half of the “mining” operations in the world are
located in China,22 and that China’s control over these operations and the government’s

16
See ConsenSys Monthly Report – Feb. 2019 (Mar. 4, 2019), https://media.consensys.net/consensys-
monthly-report-february-2019-739db290cbd.
17
See Director William Hinman, Division of Corporation Finance, Remarks at the Yahoo Finance All
Markets Summit: Crypto, Digital Asset Transactions: When Howey Met Gary (Plastic), (June 14, 2018),
https://www.sec.gov/news/speech/speech-hinman-061418.
18
Id.
19
Id.
20
See All Cryptocurrencies, CoinMarketCap, https://coinmarketcap.com/all/views/all/ (last visited Jan. 12,
2021).
21
Jerry Dunleavy, Trump spy chief seeks SEC scrutiny of Chinese dominance in cryptocurrency,
Washington Examiner (Nov. 25, 2020), https://www.washingtonexaminer.com/news/trump-spy-chief-
seeks-sec-scrutiny-of-chinese-dominance-in-cryptocurrency.
22
Id.

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possible decision to create a state-controlled digital currency posed a threat to U.S.-based
companies.23

2. Summer 2020 Letter from Senator Tom Cotton to Chairman

Clayton

According to public reports, attached to Director Ratcliffe’s November 2020 letter to

Chairman Clayton was a letter addressed to Chairman Clayton from Senator Cotton sent
in the summer of 2020.24

3. July 2020 Letter from Senator Tom Cotton to Director of National

Intelligence John Ratcliffe and National Security Advisor Robert
O’Brien

In July 2020, Senator Cotton reportedly wrote to Director Ratcliffe and National Security
Advisor O’Brien regarding how the lack of clarity in the digital asset space “hurts U.S.-
developed digital assets” and “puts American national and economic security gravely at
risk.”25

4. December 2018 Letter from Senator Tom Cotton to Chairman

Clayton

In December 2018, Senator Cotton reportedly wrote Chairman Clayton about his
concerns regarding the regulation of digital assets.26

II. Records Requested

Ripple requests disclosure of:

1. All records27 relating to the June 14, 2018 statements by then-Director Hinman
regarding ether’s status under U.S. securities laws, including but not limited to

a. all communications with the Ethereum Foundation and/or other relevant

companies (including, but not limited to, ConsenSys) or individuals in the
ether ecosystem (including but not limited to, Vitalik Buterin, Anthony Di
Iorio, Charles Hoskinson, Mihai Alisie, Amir Chetrit, Joseph Lubin, Gavin

23
Id.
24
Id.
25
Id.
26
Id.
27
For the purpose of this request, the term “records” includes any and all reports, statements, examinations,
memoranda, correspondence, notes, indices, audio or video recordings, digital files, or other records. In
the event that such records once existed but have now been destroyed, please disclose any records that are
integrally related to, summarize, or are interchangeable with said records.

4
 Wood and Jeffrey Wilcke), or any attorneys or other individuals representing
the Ethereum Foundation or other relevant companies or individuals in the
ether ecosystem, and

b. all documents, including internal communications, analyses, and other

materials, that were prepared or relied upon by Director Hinman, or any other
current or former Division Director, Staff, or Commissioner in reaching the
determination that ether is not a security, including drafts of Director
Hinman’s statements regarding ether and analyses prepared by SEC staff.

2. The letters referenced above (“the Letters”) that are in the custody, control or
possession of the SEC, including:

a. the November 2020 letter from Director Ratcliffe to Chairman Clayton;

b. the Summer 2020 letter from Senator Cotton to Chairman Clayton;

c. the July 2020 letter from Senator Cotton to Director Ratcliffe and National
Security Advisor O’Brien; and

d. the December 2018 letter from Senator Cotton to Chairman Clayton.

3. Any documents prepared by the Staff or Commissioners relating to the Letters.

4. Any documents prepared by the Staff or Commissioners regarding the potential

environmental impact of digital assets (including but not limited to bitcoin and ether).

*****

Pursuant to 5 U.S.C. § 552(a)(6)(A)(i), we look forward to your reply to the Request for
disclosure within twenty days.

Ripple requests that responsive electronic records be provided electronically in their

native file format, if possible. See 5 U.S.C. § 552(a)(3)(B). Alternatively, we request
that the records be provided electronically in a text-searchable, static-image format
(PDF), in the best image quality in the agency’s possession, and that the records be
provided in separate, Bates-stamped files.

If this Request is denied in whole or in part, we ask that you justify all denials by
reference to specific exemptions of the FOIA. We expect release of all segregable
portions of otherwise exempt material. See 5 U.S.C. § 552(b). We also reserve the right
to appeal any decision in relation to this Request.

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Ripple is willing to pay fees for this request up to a maximum of $61. If you estimate that
the fees will exceed this limit, please inform us first.

Thank you for your attention to this Request.

Sincerely,

Andrew Ceresney
Debevoise & Plimpton LLP
919 Third Avenue
New York, NY 10022

Counsel for Ripple Labs, Inc.