Government watchdog Empower Oversight has requested internal documents from the U.S. Securities and Exchange Commission (SEC) on cryptocurrency that potentially show conflicts of interest at the commission involving former high-level officials. This affects the commission’s lawsuit against Ripple Labs and its executives.
SEC’s Conflicts of Interest Involving Bitcoin, Ether, XRP, Ripple
Empower Oversight Whistleblowers & Research (Empower Oversight) announced Wednesday that it has submitted a detailed request under the Freedom of Information Act (FOIA) to the U.S. Securities and Exchange Commission (SEC) “seeking communications between SEC officials and their current and former employers.”
Empower Oversight is “a nonprofit, nonpartisan educational organization dedicated to enhancing independent oversight of government and corporate wrongdoing,” its website describes. The organization “works to help insiders document and report corruption to the proper authorities while also seeking to hold authorities accountable to act on those reports.”
In his letter to acting Chief FOIA officer Olivier Girod, Empower Oversight founder Jason Foster wrote: “We write today seeking information regarding the appearance of conflicts of interest by former high-level officials at the SEC relating to cryptocurrencies.”
The government watchdog explained that from May 2017 to December 2020:
Senior SEC official William Hinman reportedly participated in the SEC’s regulation of cryptocurrencies while receiving millions of dollars from his former employer, the law firm Simpson Thacher.
The group explained that “Simpson Thacher is a part of the Enterprise Ethereum Alliance, an industry organization whose objective is to drive the use of Enterprise Ethereum.”
Furthermore, Empower Oversight alleged that “Hinman, while in his capacity at the SEC, declared that the Ethereum cryptocurrency, ether, was not a security, causing its value to rise significantly,” adding:
Later, the SEC sued one of Ethereum’s competitors, Ripple, declaring its cryptocurrency, XRP, was a security. Shortly thereafter, XRP’s value plummeted 25%.
Noting that after Hinman left the SEC in December 2020, he returned to Simpson Thacher as a partner, Empower Oversight added that “The leader of the SEC division that brought the XRP lawsuit, Marc Berger, similarly left the SEC for Simpson Thacher.”
The announcement also mentioned former SEC Chairman Jay Clayton and how he handled cryptocurrency issues while heading the securities regulator. It details:
As with Mr. Hinman and ether, while at the SEC, Mr. Clayton declared that bitcoin wasn’t a security, and its value rose.
The government watchdog emphasized that the SEC’s lawsuit against Ripple and its executives over the sale of XRP was filed at the end of Clayton’s tenure at the commission.
Moreover, after leaving the SEC, Clayton joined One River Asset Management, a cryptocurrency hedge fund exclusively focused on bitcoin and ether, Empower Oversight noted.
Do you think there were conflicts of interest regarding how the SEC treated bitcoin, ether, and XRP as well as its lawsuit against Ripple? Let us know in the comments section below.
Image Credits: Shutterstock, Pixabay, Wiki Commons
Disclaimer: This article is for informational purposes only. It is not a direct offer or solicitation of an offer to buy or sell, or a recommendation or endorsement of any products, services, or companies. Bitcoin.com does not provide investment, tax, legal, or accounting advice. Neither the company nor the author is responsible, directly or indirectly, for any damage or loss caused or alleged to be caused by or in connection with the use of or reliance on any content, goods or services mentioned in this article.