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Anti-Corruption Watchdog Sues SEC To Comply With Freedom of Information Request, Alleges Conflict of Interest in XRP Lawsuit

Anti-Corruption Watchdog Sues SEC To Comply With Freedom of Information Request, Alleges Conflict of Interest in XRP Lawsuit
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A nonprofit organization dedicated to government oversight is taking legal action against the US Securities and Exchange Commission (SEC), alleging conflicts of interest in its handling of the crypto space.

Empower Oversight is suing the Securities and Exchange Commission to compel the regulator to comply with the Freedom of Information Act (FOIA) and to disclose communications between its top officials and current and former employers regarding crypto assets.

The lawsuit brought by the watchdog alleges that SEC officials exposed a conflict of interest by declaring digital assets such as XRP as securities while designating others such as Ethereum (ETH) as securities.

The Empower Oversight lawsuit highlights how William Henman, a former chief executive of the Securities and Exchange Commission, allegedly received large sums of money from a law firm affiliated with the Enterprise Ethereum Alliance during his time with the Securities and Exchange Commission.

Hinman reportedly continued to receive millions of dollars from Simpson Thacher while at the SEC. Simpson Thacher is a member of the Enterprise Ethereum Alliance, an industry organization that aims to “increase the use of Enterprise Ethereum.”

In a speech delivered in June 2018 in his official capacity as a SEC official, Hinman declared that the Ethereum cryptocurrency, Ether, is not a security. After its announcement, the value of Ether increased significantly. After leaving the Securities and Exchange Commission in late 2020, Hinman returned to Simpson Thacher as a partner.

The lawsuit also says Mark Berger, the SEC’s head of law enforcement who filed the lawsuit against Ripple Labs, also left the Securities and Exchange Commission for the same law firm. Ripple Labs was sued by the SEC in December of 2020 for allegedly issuing XRP as unregistered security.

In addition, the watchdog explains how SEC Chairman Jay Clayton has publicly declared Bitcoin (BTC) not to be a security, causing its price to skyrocket. According to court documents, Clayton subsequently left the Securities and Exchange Commission to join One River Asset Management, a crypto hedge fund that deals exclusively with Bitcoin and Ethereum.

According to Empower Oversight, the Securities and Exchange Commission failed to comply with six of its eight Freedom of Information Act requests. In the two of their responses, the Securities and Exchange Commission (SEC) claimed that they had no records of the information.

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Featured Image: Shutterstock / Fer Gregory

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