SEC Investigates Ethereum’s “Non-Security” Designation: Hinman Speech Faces Examination

The U.S. Securities and Exchange Commission (SEC) is set to conclude its investigation into a potential financial conflict of interest involving William Hinman, a prominent figure in the agency and a key player in cryptocurrency matters. The inquiry was initiated following a referral from Empower Oversight, a watchdog organization focused on transparency and accountability in government actions.

The investigation revolves around Hinman’s controversial speech at the 2018 Yahoo Finance Summit, in which he classified Ethereum (ETH) as a non-security asset. This statement raised concerns due to Hinman’s previous association with Simpson Thacher, a legal firm connected to the Ethereum Enterprise Alliance (EEA). Hinman received significant financial compensation from the EEA during his time at the SEC, which sparked allegations of a potential conflict of interest.

Documents obtained through a Freedom of Information Act (FOIA) request revealed the existence of a possible conflict of interest. These documents suggested that Hinman received substantial financial benefits from his former firm and maintained ongoing interactions with Simpson Thacher employees while being involved in critical SEC enforcement decisions.

Empower Oversight has expressed frustration with the slow release of FOIA materials and has warned of potential legal action against the SEC if the requested documents are not provided by a specified deadline.

The crypto community is closely watching the outcome of the SEC’s internal investigation, with stakeholders eager to see if there will be any accountability or if the investigation will be seen as a cover-up. Attorney John Deaton, representing XRP holders in the SEC v. Ripple lawsuit, emphasized the importance of upholding ethical standards and ensuring fair competition in the regulatory landscape.

Bill Morgan, an advocate for XRP, has also raised concerns about the SEC’s integrity and highlighted worries about potential conflicts of interest within the agency. The central question remains: Will William Hinman face consequences, or will the investigation be perceived as an attempt to whitewash the situation?

It remains to be seen whether this controversy will bring about changes in how cryptocurrencies are regulated. Only time will tell.