Despite warnings from the SEC Ethics Division, Hinman continued to meet with Simson Thacher while at the SEC. If the Office of Inspector General finds that the SEC acted unethically, it could be a win for the US digital asset space. This could prompt US lawmakers to limit the SEC’s enforcement-focused approach towards digital assets.
The results of the investigation by the Office of Inspector General could be released at any time. On July 9, John E. Deaton, an Amicus Curiae attorney and US Senate candidate for Massachusetts, expressed concerns about SEC practices. Deaton discussed regulatory capture and proposed a bill to impose a 3-5 year ban on regulators and lawyers from working in the industry they previously regulated.
In March 2024, Empower Oversight filed a FOIA request for records related to potential ethical violations involving William Hinman and former SEC Chair Jay Clayton. It was alleged that Clayton publicly stated Bitcoin (BTC) was not a security and supported Hinman’s comments on Ethereum (ETH). After leaving the SEC, Clayton reportedly joined a crypto hedge fund focusing on BTC and ETH.
Exposing conflicts of interest within the SEC could impact the agency’s plans to appeal unfavorable court rulings. In July 2023, Judge Analisa Torres ruled that programmatic sales of XRP did not meet the Howey Test’s third prong. If the SEC decides to appeal the Ripple verdict, XRP may face selling pressure.
Investors should stay informed about the court decision and adjust their trading strategies accordingly. Monitoring real-time data and expert commentary can help navigate the crypto market effectively.