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.
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