Government Watchdog Investigates Conflicts of Interest Involving SEC, Crypto, XRP, Ripple Lawsuit Officials

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Government watchdog Empower Oversight has requested internal U.S. Securities and Exchange Commission (SEC) documents on cryptocurrency that potentially show conflicts of interest on the commission involving former senior officials . This affects the commission’s lawsuit against Ripple Labs and its executives.

SEC Conflicts of Interest Involving Bitcoin, Ether, XRP, Ripple

Empower Oversight Whistleblowers & Research (Empower Oversight) announced Wednesday that it has submitted a detailed Freedom of Information Act (FOIA) request to the United States Securities and Exchange Commission (SEC) “seeking communications between those responsible for the SEC and their current and former employers. “

Empower Oversight is “a non-profit, non-partisan educational organization dedicated to improving independent oversight of government and corporate wrongdoing,” describes its website. The organization “strives to help insiders document and report corruption to relevant authorities while seeking to hold authorities to account on these reports.”

In his letter to Acting FOIA Director Olivier Girod, Empower Oversight Founder Jason Foster wrote: “We are writing today to seek information regarding the emergence of conflicts of interest by former senior SEC officials regarding cryptocurrencies.

The government watchdog explained that from May 2017 to December 2020:

Senior SEC official William Hinman is said to have participated in the SEC’s cryptocurrency regulation while receiving millions of dollars from his former employer, law firm Simpson Thacher.

The group explained that “Simpson Thacher is part of the Enterprise Ethereum Alliance, an industry organization whose goal is to boost the use of Enterprise Ethereum.”

Further, Empower Oversight alleged that “Hinman, while at the SEC, said the Ethereum cryptocurrency, the ether, was not a security, which drastically increased its value,” adding:

The SEC later sued one of Ethereum’s competitors, Ripple, claiming that its cryptocurrency, XRP, was a security. Soon after, the value of XRP fell 25%.

Noting that after Hinman left the SEC in December 2020, he returned to Simpson Thacher as a partner, Empower Oversight added that “The head of the SEC division that initiated the XRP lawsuit, Marc Berger, also left the SEC for Simpson Thacher. “

The announcement also mentioned former SEC chairman Jay Clayton and how he handled cryptocurrency issues while leading the securities regulator. It details:

As with Mr Hinman and the Ether, while at the SEC Mr Clayton said bitcoin is not a security and its value has risen.

The government watchdog pointed out that the SEC’s lawsuit against Ripple and its executives over the sale of XRP was filed at the end of Clayton’s tenure on the commission.

Additionally, after leaving the SEC, Clayton joined One River Asset Management, a cryptocurrency hedge fund focused exclusively on bitcoin and ether, Empower Oversight noted.

Do you think there were any conflicts of interest regarding the way the SEC handled bitcoin, ether and XRP as well as its lawsuit against Ripple? Let us know in the comments section below.

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