Background of the Case
Watchdog organization Empower Oversight Whistleblowers & Research (EMPOWR) has taken legal action against the United States Securities and Exchange Commission (SEC), aiming to compel the agency to honor a Freedom of Information Act (FOIA) request. This request seeks access to communications between former SEC officials and their past and potential employers, raising questions that could shake the foundation of the SEC’s oversight of cryptocurrency regulations.
Conflict of Interest Allegations
EMPOWR claims that former SEC officials, specifically Jay Clayton, Marc Berger, and William Hinman, possess a potential conflict of interest regarding their connections to the ever-evolving cryptocurrency landscape. According to the lawsuit, such conflicts could affect how cryptocurrencies are deemed securities under SEC regulations.
The Noteworthy Players
The lawsuit centers on significant figures:
- Former SEC Chair Jay Clayton—currently a part of One River Asset Management.
- Former Enforcement Division Director Marc Berger—now a partner at Simpson Thacher.
- Former Director of Corporate Finance William Hinman—who rejoined Simpson Thacher after his SEC tenure.
EMPOWR’s statement underscores, “These events raise serious questions about conflicts of interest at the heart of government regulation of the cryptocurrency market. This is a classic ‘you scratch my back, I scratch yours’ scenario, and we deserve to know what’s really going on!”
Hinman’s High-Stakes Speech
The spotlight shone brightly on Hinman during his SEC address titled, “Digital Asset Transactions: When Howey Met Gary (Plastic).” In this infamous speech, he declared Ether (ETH) as a commodity, triggering a ripple effect where its value surged dramatically. As they say, timing is everything!
Document Disputes
Interestingly, the documents pertaining to Hinman’s speech are at the heart of a legal battle between the SEC and Ripple Labs, as Ripple is fighting allegations that sales of its XRP coin infringed on U.S. securities laws. EMPOWR, apparently channeling its inner detective, is determined to dig up any correspondence that might expose deeper relationships and possible motivations among these officials.
The Long and Winding Path to Justice
The saga began in August 2021 when EMPOWR initially requested eight categories of records from the SEC. After facing a wall of silence and vague responses (we’re looking at you, ‘no records’ claims), they filed a complaint in December of that year. To add to the drama, the SEC hyperventilated over the inability to find documents, then, much to everyone’s shock, eventually admitted to uncovering a whopping 1,000 pages of mistakenly hidden emails.
What’s Next?
Fast forward to December 2022—EMPOWR is back at it with another FOIA request. The current suit represents their frustration in getting concrete answers. As Jason Foster tweeted, “Hey @SECGov, this is not a game. Do the searches and produce the documents!” Sounds like EMPOWR is ready for a Government Showdown!
