The newly discovered documents could be a major obstacle in a lawsuit against Ripple by the Security and Exchange Commission (SEC) if a former commission official proves a conflict of interest.
The SEC has been embroiled in a legal battle with blockchain company Ripple (XRP) since 2020, with the cryptocurrency company and its senior executives Brad Garlinghouse and Christian Larsen being accused of selling XRP tokens as unregistered securities.
May 10 presentationCorruption watchdog Empower Oversight said in documents obtained in response to a request for disclosure that former SEC corporate finance director William Hinman had a conflict of interest. speech In 2018, he stated that Ether (ETH) and its transactions are not securities.
Empower Oversight, SEC-OIG Conducts Investigation into SEC Ethics Office’s Failure to Prevent Senior Employee Cryptocurrency Conflicts of Interesthttps://t.co/fMRPTUN0ov#cryptocurrency trading #cryptocurrency #Bitcoin $BTC $ETH $XRP
— Enhanced Supervision (@EMPOWR_us) May 10, 2022
According to the nonprofit watchdog group, Hinman should have refrained from talking about Ethereum because of his private “direct financial interests” with the Simpson Thacher & Bartlett law firm. 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 198,000 Twitter followers on May 11 that Hinman’s potential compliance failure could jeopardize the SEC’s entire case against Ripple. If a conflict exists, Deaton said it could be Ripple’s “setup and match the game.”
@EMPOWR_us And @JsnFoster Retrieved the email below. If Hinman has not submitted a speech to the crash judging, it is a game set and match. If we force this investigation through a letter from Congress, the Ethics Office will be angry and want to throw him under the bus. pic.twitter.com/8j9Nwb0OCn
— John E Deaton (@JohnEDaton1) May 11, 2022
According to Law360, a law firm, Hinman worked Prior to joining the SEC, he worked for Simpson Thacher before rejoining the company in 2021.
Empower Oversight alleges that Hinman received $1.5 million in severance pay from the law firm each year during his tenure with the SEC, and that he had “repeated contact with law firm employees”. The organization noted that the SEC’s “ethics office has expressly instructed him not to have any contact with Simpson Thacher employees”.
The organization has requested that Hinman conduct a “Comprehensive Review of SEC Ethics Management” with the Office of the SEC Comptroller to determine whether there was a conflict of interest. The review includes the following considerations:
“(1) I understand the extent to which the conflict involving this former official has exacerbated the perception that the SEC’s enforcement actions have selectively targeted some cryptocurrencies and passed others for free.
(2) explain to the public how the SEC’s Ethics Office failed to effectively comply with clear guidelines; (3) Evaluate the SEC’s policies and procedures to identify ways to better monitor compliance with ethical guidelines.”
(3) Evaluate the SEC’s policies and procedures to identify how to better monitor compliance with the Code of Ethics.”
The latest development in the case is an unexpected twist on former SEC official Joseph Hall’s February prediction that the committee would lose to Ripple based on the merits of the case.
Many in the crypto industry have been keeping a close eye on this case because the consequences are likely to have a huge impact. If Ripple wins, it will force the SEC back from its aggressive stance on cryptocurrencies. If the committee wins, it will almost certainly open up a new field of litigation against cryptocurrency companies.
Relevant: SEC and CFTC Chairs Discuss Crypto Regulations at ISDA Meeting
XRP has fallen 19.2% in the last 24 hours and is trading at $0.41, according to CoinGecko. data.