Former SEC Director Hinman is accused of breaching ethical rules on purpose. Empower Oversight reports that Hinman was informed about his ties with Simpson Thacher by Shira Minton, the SEC’s Ethics Counsel. In April 2017, Minton instructed Hinman to stay away from things involving his old company. In connection with the ongoing SEC vs Ripple lawsuit, Empower Oversight, a whistleblower group, has revealed details of emails obtained through a freedom of information request.
They claim there is proof that former SEC Director William Hinman had a potential conflict of interest while pursuing legal procedures against Ripple among the 200 pages or so. The point of contention is Hinman’s engagement with the Ethereum Enterprise Alliance through Simpson Thacher, a New York-based law firm. Things take a darker turn this time, as the emails expose devastating material that was not available last year.
According to Empower Oversight, Hinman allegedly rejected Minton’s requests to meet with a partner at Simpson Thacher on at least three occasions after the email was sent. Hinman is also alleged to have met with Ethereum co-founders and investors prior to his now-famous June 2018 speech, in which he asserted that Ethereum isn’t a security.
Doubts over SEC vs Ripple lawsuit legality continues
In December 2020, the SEC filed charges against Ripple for selling unregistered securities in its native XRP coin. The equivalence of XRP to Bitcoin and Ethereum is a significant defensive argument. Hinman gave a speech in June 2018 in which he stated that Bitcoin and Ethereum are not securities. Ripple’s legal staff is curious as to why XRP was singled out as being non-equivalent.
The “no notice” defence, which claims that Ripple was not informed that XRP was not equal, is linked to this. As a result, the firm assumed they were operating within the bounds of applicable securities regulations.
Hinman receives a $1.6 million per year pension from Simpson Thacher, according to documents released last year. Furthermore, this money was paid while he was a member of the SEC’s board of directors (at the time of the June 2018 speech).
Because Simpson Thacher is a member of the Ethereum Enterprise Alliance, Ethereum’s “not a security” designation is called into question. He stated:
“This raises questions as to whether Hinman fully disclosed Simpson Thacher’s role in Ethereum to SEC ethics officials and whether they would have approved the meetings or his speech if he had.”
These claims have little bearing on the Ripple case on their own. Instead, they cast doubt on the SEC’s credibility. An agency that mandates legal behaviour must set an example in this regard.
