A lawyer and crypto legal expert says a breach of ethics could spell the end of the SEC’s lawsuit Ripple laboratories.
Attorney John Deaton points to documents uncovered by an anti-corruption watchdog Empower Oversight involving former SEC director of corporate finance William Hinman and a speech he gave in 2018 that said so Ethereum is not security.
According to Empower Oversight, uncovered emails suggest Hinman knowingly had a conflict of interest in delivering the speech prior to delivering it. If proven, Deaton says, it would spell the end of the SEC’s lawsuit against Ripple, which was filed in December 2020 alleging that XRP was issued as an unregistered security.
“If Hinman didn’t put the speech through conflict screening, it’s game, set and match. The ethics office will be mad and want to throw him under the bus if we force this investigation through letters from Congress.”
according to a Explanation published by Empower Oversight, Hinman had ties to Simpson Thacher, a law firm that promoted Ethereum (ETH), the speech was held at the same time. Hinman also rejoined the law firm shortly after the lawsuit was filed.
The group says the SEC’s Ethics Office warned Hinman that he must withdraw from the matter.
“[Our] The FOIA request shows that the SEC’s Office of Ethics warned Mr. Hinman that he had a direct financial interest in his former law firm, Simpson Thacher, and that he therefore needed to withdraw from all matters that would affect the firm; and so that he might not have misunderstood his position, the Ethics Office specifically told him not to have any contact with Simpson Thacher personnel.”
Empower Oversight says that Hinman had failed to disclose his ties to the law firm and that his comments helped bolster the law firm’s price on Ethereum at the time of the speech.
“Recordings and other information shared with Empower Oversight tend to show that Mr. Hinman failed to disclose Simpson Thacher’s and, by extension, his direct financial involvement in the Enterprise Ethereum Alliance…
In his speech, he opined that Ethereum is not a security and stated that ‘Based on my understanding of the current state of Ethereum, the Ethereum network and its decentralized structure, current Ethereum offerings and sales are not security transactions.’ The value of Ethereum rose immediately after Mr. Hinman’s speech.”
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Source: Crypto News Deutsch