XRP Lawsuit: US Senator Calls Out Hinman For Conflict Of Interest

June 6, 2022 4:24 pm Comments

As the lawsuit continues to drag on, the focus on the former SEC official William Hinman and any documents that are related to him continue to be a popular topic that could determine the result of the case.

Most recently, US Senator Mike Crapo has called out Hinman’s potential conflict of interest with the Ethereum cryptocurrency.

Specifically, Crapo states that the organization Empower Oversight has already requested an investigation to look into this conflict of interest where Hinman supposedly ignored the instructions from SEC’s ethics office to not contact anyone from Simpson Thacher.

This is due to the fact that Simpson Thacher was a member of the Enterprise Ethereum Alliance.

It became extremely concerning when the SEC decided to initiate a lawsuit against one of Ethereum’s main rivals which was Ripple.

As a result, the senator has stated that the regulations must be fair and equitable for all parties in order to ensure that the US remains a country that leads the development in cryptocurrencies.

John Deaton shares a screenshot of Crapo’s letter:

This claim is particularly gravid in light of the SEC’s ongoing lawsuit against Ripple Labs Inc. ( SEC vs. Ripple).

On December 22, 2020, the SEC announced that it filed an action against Ripple, one of Ethereum’s rivals, and two of its executives, claiming that Ripple raised over $1.3 billion through an unregistered, ongoing digital asset securities offering.

I agree that innovations such as cryptocurrencies are inevitable and beneficial, and that the U.S. should lead in their development.

As virtual currencies become a larger part of our trading marketplace it is important that regulations keep pace in order to foster this technology while maintaining just and equitable standards and ensuring full transparency.

I will continue to work with my colleagues and the Administration to develop established practices for the use of cryptocurrencies.

This support from a US Senator is extremely revealing and indicates that many investors should be concerned about the recent actions of the SEC.

After all, the actions seem to indicate that the playing field is not equal for everybody within the crypto industry and that details regarding Hinman continue to grow as the case progresses.

This letter from Senator Crapo also follows another letter from several members of Congress who had also previously submitted a letter requesting the SEC to reveal its process on how it decided on its recent enforcement actions.

The concern was that the SEC’s actions were over-regulating the industry which would lead to stifling innovation in the crypto space.

Crapo also cites details of Empower Oversight’s investigation request:

On May 10, 2022, Empower Oversight, a watchdog nonprofit, requested the SEC’s Office of the Inspector General to conduct an investigation regarding a former SEC official, William Hinman, and his potential conflict of interest regarding Ethereum cryptocurrency.

In 2018, Hinman gave a speech stating that Ethereum sales and offers would not qualify as securities transactions, which would not place them under the SEC’s jurisdiction.

Empower Oversight claims Hinman did not follow directives from the SEC’s ethics office that would have allowed him to avoid conflicts tied to his financial interests in Simpson Thacher, his former and now current employer, and the firm’s connection to the Enterprise Ethereum Alliance (EEA) and Ether cryptocurrency

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