Will the US SEC falter in its lawsuit against Ripple because of William Hinman’s conflict of interest?
Several recently released documents could hinder the US Securities and Exchange Commission (SEC) in its lawsuit against Ripple if the former commissioner is proven to have a conflict of interest.
Conflict of interest in Ripple – SEC
The SEC has been conducting a lawsuit against blockchain company Ripple since 2020, in which the regulator accused the company and its executives Brad Garlinghouse and Christian Larsen of selling XRP tokens as unregistered securities.
Empower Oversight sent a letter to the SEC-OIG requesting a comprehensive review of the SEC’s ethics officials to properly manage SEC official William Hinman’s potential conflict of interest regarding cryptocurrency issues.https://t.co/6CqAj2GDxO
— Empower Oversight (@EMPOWR_us) May 10, 2022
According to a May 10 announcement, corruption watchdog Empower Oversight stated that documents obtained under a Freedom of Information request show that former Director of Corporate Finance at SEC William Hinman had a conflict of interest. useful in 2018 and should not have made the speech when he claimed Ether (ETH) and its transactions were not securities.
According to the nonprofit watchdog, Hinman should not talk about Ethereum due to his undisclosed “direct financial interests” with the law firm Simpson Thacher & Bartlett, a member of the Enterprise Ethereum Alliance (EEA). It is known that the EEA is the promoter of the use of blockchain technology on Ethereum.
Crypto Law founder and attorney John Deaton said Hinman’s failure to comply could jeopardize the SEC’s lawsuit against Ripple. According to Deaton, if the conflict is proven to exist, the advantage is definitely in Ripple’s favor. According to Law360, Hinman worked at Simpson Thacher before joining the SEC, returning to the company in 2021.
Empower Oversight said that Hinman was receiving $1.5 million in retirement benefits from the law firm annually while he worked at the SEC and alleged that he “had repeated contact with the law firm’s personnel.” The organization noted that the SEC’s “Ethics Office explicitly told him not to have any contact with Simpson Thacher personnel.”
The organization asked the SEC’s Office of the Inspector General to conduct a comprehensive ethics review of officials to determine whether Hinman had a conflict of interest. That review includes:
- Understand the degree to which the conflict involving this former official exacerbated the perception that the SEC’s enforcement actions have selectively targeted some cryptocurrencies while giving others a free pass
- Explain to the public how the SEC’s Ethics Office failed to effectively ensure compliance with its clear directives
- Evaluate the SEC’s policies and procedures to identify ways to more effectively monitor compliance with ethics guidance.
This latest development is an unexpected twist from former SEC official Joseph Hall’s February prediction that the commission would lose to Ripple based on the case’s merits.
Many in the crypto industry have been closely watching the lawsuit for a while as its outcome will have major implications. If Ripple wins, they will force the SEC to back out and take a more positive stance on cryptocurrencies. If the committee wins, perhaps crypto companies will be engulfed in litigation with no way out.
- Newly Discovered Documents Suggest A Possible Conflict Of Interest From A Former SEC Official In Its Case Against Ripple
- Several Top Exchanges And Anonymous Wallets Have Transferred Close To Hundreds Of Millions Of XRP In A Day