Pressure on the Securities and Exchange Commission (SEC) is mounting over an alleged conflict of interest involving a member of the agency and Ethereum, the blockchain cryptocurrency Ethereum.
Empower Oversight, a non-partisan, nonprofit organization has called for an ethics investigation with the SEC after records emerged that said one of its former employees, William Hinman, had a direct financial interest in a law firm. Ether. When Simpson Thatcher was in the SEC.
These allegations are at the center of an ongoing lawsuit between the SEC and Ripple Labs, the company behind the Ripple cryptocurrency.
In December 2020, the SEC sued Ripple, alleging it is an unregistered security. At the same time, Hinman pointed out that the ether with which Ripple competes is not a security.
If the SEC identifies a cryptocurrency as a security, it usually has a negative impact on its price, and soon after the SEC announced its lawsuit, Ripple’s price dropped from $0.45 to $0.25 in the afternoon on the day of the announcement. . At the end of the month, Ripple’s price was $0.22, half the price before the SEC announced its lawsuit.
Thanks to Empower Surveillance:
Contrary to SEC Ethics Office guidance, records and other information disclosed by Empower Oversight generally indicate that Mr. Hinman did not disclose Simpson Thatcher’s direct financial interests – and in addition, he – in the “Enterprise Ethereum Alliance, which describes itself as an industry entity.” . In his speech at the SEC, his aim is to promote the use of “Enterprise Ethereum” and the cryptocurrency Ether. In his speech, he said that based on my understanding of the current state of Ethereum, the Ethereum network and its decentralized nature, Ether’s current offerings and sales are not security transactions, noting that Ether is not a security. Immediately after Mr. Hinman’s speech, the value of Ether increased.
Hinman’s role in the SEC was a key element of the lawsuit brought against the SEC by Ripple (XRP), a cryptocurrency that competes with Ethereum and is classified as an SEC security.
In his letter to the SEC, Sen. Mike Capo (R-ID) expressed concern about the role that conflicts of interest may have played in their decisions.
From a letter:
This claim is particularly serious in light of the SEC’s ongoing lawsuit against Ripple Labs Inc. ( SEC vs. Ripple ).
On December 22, 2020, the SEC announced that it had filed a lawsuit against one of Ethereum’s rivals, Ripple, and its two executives, alleging that Ripple had raised more than $1.3 billion through unregistered perpetual securities offering digital assets.
I agree that innovations like cryptocurrencies are inevitable and beneficial and that the US should lead their development.
As virtual currencies become a larger part of our trading market, it is important that regulations keep pace with the times to encourage the development of this technology while maintaining fair and equitable standards and ensuring full transparency.
I will continue to work with my colleagues and the Administration to develop embedded applications for the use of cryptocurrencies.
Empower Oversight has requested the SEC inspector general, which investigates ethics violations at the agency, to initiate an investigation into the alleged surveillance breach.
Source: Breitbart
