The U.S. Security and Exchange Commission’s (SEC) Office of Inspector General (OIG) is investigating cryptocurrency-related financial conflicts of interest identified by accountability group Empower Oversight.
In a Feb. 15 statement, Empower Oversight announced that the SEC’s division was in the “final stages of concluding” an open investigation into matters related to the failure of the SEC’s Ethics Office and a former official , William Hinman.
Hinman is accused of participating in cases in which he had a financial interest, most notably making a controversial speech claiming that specific digital assets, such as Ethereum, were not regulated as securities under SEC regulations.
Critics within the Ripple XRP community claim that Hinman’s speech unfairly favored Ethereum, potentially giving it an edge over other digital assets on the market.
Empower Oversight highlighted its concerns by presenting documentation showing that key Ethereum figures, including co-founders Joseph Lubin and Vitalik Buterin, were involved in drafting the infamous speech.
Additionally, the watchdog group also stated that Hinman “blatantly ignored” instructions not to meet with specific individuals while working at the SEC, such as his former employer, Ethereum Enterprise Alliance (EEA) member Simpson Thacher.
“When Hinman left the SEC in December 2020, he returned to Simpson Thacher as a partner. That same month, the SEC sued Ripple, alleging XRP was an unregistered security,” wrote Tristan Leavitt, president of Empower Oversight.
This matter was officially brought to the attention of the OIG in May 2022.
Threatens lawsuit
Empower Oversight has threatened the financial regulator with a lawsuit if it does not provide information about its investigations by February 23.
The group noted that the SEC has not provided any information about the case since filing a Freedom of Information Act (FOIA) in May 2023.
Leavitt said:
“The positive thing is that we now know that one of the reasons for the pushback is that there is actually an active investigation by the Inspector General, and that is almost complete. However, whether the OIG report thoroughly addresses all the issues we raised remains to be seen, as we do not know the exact scope of the investigation. The SEC’s OIG must do this right and help prevent similar conflicts of interest from undermining public confidence in the SEC’s work in the future.”