A new discovery of documents suggests a conflict of interest by a former SEC official who made a speech on Ethereum. Some claim that this could have been a way for the SEC to undermine Ripple’s case.
If documents are found that show a former official of the Securities and Exchange Commission had a conflict, they could be a significant roadblock in the Securities and Exchange Commission’s case against Ripple.
Since 2020, the SEC has been involved in a legal battle with Ripple ( XRP). In which Ripple and its senior executives Brad Garlinghouse & Christian Larsen were accused of selling XRP tokens unregistered securities.
Empower Oversight, a corruption watchdog, claimed in a May 10 announcement that documents obtained through a Freedom Of Information Request suggested that William Hinman, former SEC Director for Corporate Finance, had a conflict and should not have made a speech this year in which he claimed that Ether ( ETH) is not securities and that its transactions were not securities.
The non-profit watchdog says Hinman should have resigned from speaking about Ethereum because of his undisclosed “direct economic interest” with Simpson Thacher & Bartlett, a memberof the Enterprise Ethereum Alliance (EEA).
The EEA encourages the use blockchain technology on Ethereum blockchain.
John Deaton, founder of Crypto Law legal news outlet, told his 198,000 followers on May 11th that Hinman’s possible compliance failure could endanger the entire case against Ripple. Deaton stated that if the conflict is present, the case could be “game-set and match” for Ripple.
Law360, a legal news outlet reports that Hinman worked for Simpson Thacher before joining SEC. He then returned to the firm in 2021.
Empower Oversight stated that Hinman received $1.5 million annually in retirement benefits from the firm while he was employed at the SEC. The organization also noted that the SEC’s Ethics Office specifically told Hinman not to have contact with Simpson Thacher employees.
The group requested that the Office of the Inspector General of the SEC conduct an “in-depth review of the SEC’s ethics officers” in order to determine if Hinman was in conflict of interest. These are the main considerations for that review:
“(1) Recognize the extent to which conflict involving this former official has exacerbated perception that the SEC’s enforcement actions have selectively targeted certain cryptocurrencies while giving other a pass;
(2) Explain to the public why the SEC’s Ethics Office did not effectively enforce its clear directives. (3) Evaluate the SEC’s policies and procedures in order to find ways to better monitor compliance with the ethics guidance.
(3) Assess the policies and procedures of the SEC to determine ways to monitor compliance with ethical guidance more effectively.
This is an unexpected twist to the February prediction by Joseph Hall, a former SEC official, that the Commission would lose the Ripple based upon the merits.
This case is being closely watched by many in the crypto industry as it could have huge implications. Ripple’s victory would mean that the SEC will have to change its aggressive approach towards crypto. The possibility of new litigation against crypto companies would increase if the commission wins.
According to CoinGecko data, XRP has fallen 19.2% over the last 24 hours and is currently trading at $0.41