US SEC Under Fire: Empower Oversight Demands XRP Case Transparency

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Empower Oversight is stepping up its attempts to receive information from the Securities and Exchange Commission (SEC) about the conflicts of interest and selective enforcement of cryptocurrencies.

The complainant has asked the SEC’s OIG to issue a report that is still pending and assesses these questions of law, especially those concerning Hinman and Clayton of the SEC.

US SEC Under Fire On Conflict of Interest

Empower Oversight has been trying to get information on conflict of interest at the SEC for almost three years now. In August 2021, the organization began a FOIA lawsuit, which demanded records of the communication between SEC representatives and other parties concerning cryptocurrencies.

BREAKING: @EMPOWR_us Presses @SECGov IG to Complete and Issue Ethics Report on Hinman Conflicts of Interest; Submits NEW REFERRAL ON JAY CLAYTON https://t.co/4U5DDieZ9n

— CryptoLaw (@CryptoLawUS) July 16, 2024

Even when signals were put out five months ago that the SEC-OIG was finalizing its report, Empower Oversight remains worried about the thoroughness of the investigation.
Tristan Leavitt, the president of Empower Oversight, noted that the report may only focus on the conflicts of interest involving Hinman and not those involving former SEC Chair Jay Clayton.

Leavitt also noted that it is very important to look at Clayton’s decisions during his time at SEC, especially concerning the aforementioned cryptocurrencies – Bitcoin, Ether, and XRP – for the sake of proving that the firm can effectively manage and avoid conflicts of interest.

Legal Battles for Transparency

Empower Oversight’s efforts to promote transparency have resulted in several lawsuits. In December 2021, the organization sued the SEC to obtain information on the matters of interest conflict and selective actions taken by the US SEC.

However, the firm has been alleged to have dragged its feet in responding to the FOIA requests, and this culminated into other lawsuits in May 2023 and March 2024. The SEC’s unwillingness to release the documents has been a source of worry on the part of the agency on transparency.

Leavitt also accused the SEC of delaying tactics with regards to the FOIA requests saying that the delay has hampered the monitoring of possible conflict of interest concerning the decisions made by the SEC officials on cryptocurrencies.

Hinman and Clayton’s Cryptocurrency Decisions Under Scrutiny

William Hinman, the former Director of SEC and Jay Clayton, the former Chair of SEC have been in the middle of controversy concerning cryptocurrency regulation. Hinman was well compensated by his previous law firm Simpson Thacher which had a financial interest in pushing Ethereum. The speech made by Hinman in 2018 that Ether is not a security has formed the center of Empower Oversight’s investigations.

Likewise, Clayton’s time in the chairmanship of the firm has been associated with a number of regulatory actions concerning Bitcoin, Ether, and XRP. The FOIA requests that Empower Oversight sent were intended to reveal any possible conflicts of interest and contacts between Clayton and cryptocurrency enthusiasts.

The firm’s refusal to provide these documents has been an ongoing issue and raises questions about the integrity of the SEC’s decision-making process.

Ripple vs SEC: Awaiting Transparency and Final Judgment

The legal conflict between Ripple Labs and the SEC has also played a role in emphasizing the importance of clarity. The case relates to the SEC’s determination of XRP as an unregistered security, and the public has shown keen interest in the possibility of settlements.

In spite of several backdoor meetings, Marc Fagel, a former SEC lawyer, has come out to dismiss rumors of the two parties entering into settlement negotiations, citing that both are still waiting for the district court’s decision.

Empower Oversight is still campaigning for information on how the firm has dealt with cryptocurrencies, such as the Ripple case. The organization’s actions reflect the general trend whereby regulatory authorities responsible for the cryptocurrency markets are being called to explain their actions.

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