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The watchdog group Empower Oversight Whistleblowers & Research (EMPOWR) has filed a lawsuit against the U.S. Securities and Exchange Commission to force the agency to comply with a Freedom of Information Act (FOIA) request for access to communications between former SEC officials and their former and future employers.
EMPOWR stated in its lawsuit that the former SEC officials had a potential conflict of interest regarding the cryptocurrency. The lawsuit specifically named former Securities and Exchange Commission chairman Jay Clayton, former director of enforcement Mark Berger, and former corporate finance director William Hinman. By costume:
“The requested records will shed light on whether former SEC officials had conflicts of interest in declaring whether certain cryptocurrencies are securities and therefore subject to SEC regulation.”
Hinman was a partner at law firm Simpson Thacher before joining the SEC in 2017. He will return to the firm after leaving the SEC in October 2020.
Berger partnered with Simpson Thacher after leaving the SEC in 2021, while Clayton joined cryptocurrency hedge fund One River Asset Management in 2021. EMPOWR said:
“These developments raise serious questions about the potential conflicts of interest underlying government regulation of the emerging cryptocurrency market.”
Simpson Thatcher was a member of the Enterprise Ethereum Alliance, an advocacy organization that sought to “incentivize the use of Enterprise Ethereum.” EMPOWR stated that Hinman reportedly received millions of dollars from the law firm during his time with the SEC.
hey @SECGov, this is not a game. The law requires you to do these searches and you have known it all along.
Time for the foot-dragging and dishonesty to stop. Be serious professionals. Do the searches and produce the documents.
From our complaint, available here:… https://t.co/pocmaHE3tq pic.twitter.com/0FhKGuPo61
— Jason Foster (@JsnFostr) May 11, 2023
EMPOWR saw Hinman’s ongoing ties with his old law firm as a possible conflict, as while at the SEC, Hinman gave a speech “Digital Asset Transactions: When Howie Met Gary (Plastic)”, stating that Ether (ETH) is a commodity, after which “The cost of Ether has risen significantly.” Documents related to this speech were also the subject of a lawsuit between the SEC and Ripple Labs in an agency case alleging that the sale of the Ripple XRP (XRP) coin violated U.S. securities laws.
Related: ‘Worth Fighting’ – Ripple Advisor Confirms Hinman Documents Are in Their Hands
The current lawsuit is the latest in a series of lawsuits related to EMPOWR’s original FOIA request for eight categories of records filed in August 2021. EMPOWR filed a complaint in December of that year without receiving a response from the SEC to its request. The SEC then responded with “no records” to four of the eight categories, but later admitted that those answers were erroneous and found 1,000 pages of records from the emails it found.
After trying to get the SEC to expand its document search, EMPOWR filed a new FOIA request in December 2022. The current lawsuit is an attempt to get an answer to this request.