Lawsuit Alleges SEC Conflicts of Interest Linked to Former Officials and Ethereum

Empower Oversight, a civil-rights nonprofit, has demanded that the SEC disclose documents concerning a potential conflict of interest in the actions of former senior officials. The suit was filed in the Eastern District of Virginia.

The SEC failed to comply with six of the eight categories of documents in Empower Oversight’s FOIA request. According to the SEC, searches for two of the categories found no records.

— Empower Oversight (@EMPOWR_us) December 10, 2021

The plaintiff seeks access to documents under the Freedom of Information Act (FOIA).

“Statements by some former SEC officials about whether specific cryptocurrencies are securities and, consequently, subject to SEC regulation, raise serious questions about potential conflicts of interest.”

In August, the advocacy group alleged an affiliation of former SEC corporate-finance chief William Hinman, former SEC chair Jay Clayton, and the head of the unit that filed the Ripple suit, Mark Berger.

Hinman stated in 2018 that Ethereum does not possess the characteristics of a security. According to Empower Oversight, at the same time the official “received millions of dollars from his former employer, the law firm Simpson Thacher,” linked to the Enterprise Ethereum Alliance.

Clayton, who after leaving the SEC joined the regulatory affairs advisory board of the hedge fund One River Asset Management, argued that Bitcoin is not a security. A year later the head of the agency voiced a similar view on Ethereum.

In the summer, Empower Oversight sought the disclosure of Hinman’s and Berger’s correspondence with Simpson Thacher and the Enterprise Ethereum Alliance during their tenures, as well as Clayton’s contacts with One River prior to his departure from the SEC.

Empower Oversight said the Commission had “failed to comply with six of the eight FOIA requests” for document disclosures.

The SEC failed to comply with six of the eight categories of documents in Empower Oversight’s FOIA request. According to the SEC, searches for two of the categories found no records.

— Empower Oversight (@EMPOWR_us) December 10, 2021

“According to the SEC, searches for two categories of records found no results,” the statement read.

The advocates filed suit seeking to compel the Commission to “immediately provide” the information for each of the six requests.

Earlier Fox Business published a sweeping investigation into the SEC’s case against Ripple. Journalists concluded that the staff behind the filing of the suit may have been affiliated with Ethereum.

In August Ripple managed to compel Hinman to testify in court despite the SEC’s attempts to have the motion denied.

Later, fintech head Brad Garlinghouse described Ethereum’s success as the result of the SEC’s favorable stance .

Ripple lawyers described the Commission’s defence as aggressive and said the agency must justify withholding information from the court for each requested document.

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