The newly uncovered documents could prove to be a major hurdle for the U.S. Securities and Exchange Commission (SEC) in its case against Ripple if it proves that former Commission officials had conflicts of interest.
The U.S. Securities and Exchange Commission has Involved in legal disputes Against blockchain company Ripple (Ripple) Since 2020, crypto companies and senior executives Brad Garlinghouse and Christian Larsen have been charged with selling XRP tokens as unregistered securities.
on May 10 announcementCorruption watchdog Empower Oversight claims documents obtained under a freedom of information request show William Hinman, a former SEC chief financial officer, had a conflict of interest and should not have made speech In 2018, he stated that ether (Ethereum), whose transactions are not securities.
Empower Oversight Asks SEC-OIG to Probe into SEC Ethics Office’s Failure to Prevent Crypto Conflicts of Interest by Senior Staffhttps://t.co/fMRPTUN0ov#cryptotransaction #cryptocurrency #bitcoin USD Bitcoin $ETH $Ripple
— Authorized Oversight (@EMPOWR_us) May 10, 2022
According to the nonprofit regulator, Hinman should refrain from talking about ethereum because his undisclosed “direct financial interest” at the law firm Simpson Thacher & Bartlett is a company member Enterprise Ethereum Alliance (EEA).
The EEA promotes the use of blockchain technology on the Ethereum blockchain.
John Deaton, founder of legal news outlet Crypto Law, told his 198,000 Twitter followers on May 11 that Hinman’s potential compliance failure could jeopardize the entire SEC case against Ripple. If there is a conflict, Deaton said the case could be Ripple’s “game setting and matching.”
@EMPOWR_us and @JsnFostr The following emails were retrieved. If Hinman didn’t submit the speech to conflict screening, it’s game setup and matchmaking. If we forced this investigation through congressional letters, the ethics office would be pissed and wanted to throw him under the bus. pic.twitter.com/8j9Nwb0OZn
– John E Deaton (@JohnEDeaton1) May 11, 2022
According to legal news outlet Law360, Hinman worked He served at Simpson Thacher before joining the SEC before rejoining the company in 2021.
Empower Oversight said Hinman received $1.5 million in annual retirement benefits from the law firm while he was with the SEC, and claimed he had “many contacts with the law firm’s personnel.” The group noted that the SEC’s “ethics office specifically told him not to have any contact with Simpson Thacher personnel.”
The group asked the SEC’s Office of the Inspector General to conduct a “comprehensive review” of the SEC’s ethics officers to determine whether Hinman had a conflict of interest. This review will include the following considerations:
“(1) understand the extent to which the conflict involving the former official has fueled the perception that SEC enforcement actions are selectively targeting certain cryptocurrencies while giving others a free pass;
(2) Explain to the public how the SEC Ethics Office has failed to effectively ensure compliance with its clear directives; (3) Evaluate the SEC’s policies and procedures to determine ways to more effectively monitor compliance with the Code of Ethics. “
(3) Evaluate the SEC’s policies and procedures to determine ways to more effectively monitor compliance with ethics guidance. “
The latest developments in the case have taken an unexpected turn from the predictions made by former SEC official Joseph Hall in February. Commission will be lost Ripple according to the case.
Many in the crypto industry have been watching the case closely because the outcome could have big implications.If Ripple wins, it will force the SEC to withdraw from its Aggressive stance on cryptocurrencies. If the committee wins, it will almost certainly open the door to a flurry of new lawsuits against crypto companies.
XRP is down 19.2% in the past 24 hours to trade at $0.41, according to CoinGecko data.