QUICK TAKEAWAY: The SEC has cleared former official Bill Hinman of misconduct claims over his 2018 speech favouring Ethereum, finding no conflict of interest tied to his former firm, Simpson Thacher. Critics, including Empower Oversight, argue the probe ignored selective enforcement issues, especially with the SEC’s 2020 Ripple lawsuit. The crypto community remains divided, demanding transparency, as the case underscores challenges in fair regulation.
SEC Releases Crypto Conflicts Report on Selective Enforcement Involving ETH and XRP
The U.S. Securities and Exchange Commission (SEC) has released findings from an internal investigation into misconduct allegations against Bill Hinman, its former Director of Corporation Finance, regarding selective enforcement in crypto regulation.
The Crypto Conflicts report, issued by the SEC’s Office of Inspector General (OIG), dismisses claims that Hinman favoured Ether (ETH) over XRP due to conflicts of interest tied to his former employer, Simpson Thacher & Bartlett. However, watchdog group Empower Oversight argues that the investigation has failed to address broader issues of regulatory fairness regarding ETH and XRP.
Detailed in a 10-page document obtained by whistleblower organization Empower Oversight, the SEC investigation on Hinman’s 2018 speech focused on accusations that he misused his authority during his SEC tenure from 2017 to 2020.
Notably, critics highlighted his 2018 speech, where he declared ETH was not a security. This statement contrasted with the SEC’s 2020 lawsuit against Ripple, the San Francisco-based company behind XRP. Empower Oversight also alleged that Hinman’s ties to Simpson Thacher, a law firm linked to the Enterprise Ethereum Alliance, influenced his stance, potentially benefiting his former firm.
However, the OIG report concluded that Hinman did not violate conflict-of-interest laws. It noted that he held no cryptocurrency assets, as verified by a 2021 financial disclosure, and had restructured his Simpson Thacher retirement plan to a fixed rate upon joining the SEC, adhering to ethics guidelines. The report also stated that Hinman’s Ether remarks were prepared with input from SEC colleagues, indicating agency consensus rather than personal bias.
Amid the clearance, Empower Oversight criticized the investigation’s narrow focus. Jason Foster, the group’s founder, argued it failed to address whether Hinman’s firm contacts were improper or if the SEC’s differing treatment of ETH and XRP indicated selective enforcement. According to Empower Oversight, the crypto conflicts report dodges the real question of whether the SEC played favorites, pointing to ongoing industry concerns about regulatory inconsistency.
We finally got the SEC Inspector General's Crypto Conflicts report, focusing on William Hinman. The narrow question of whether he committed a crime is a high bar the OIG predictably didn't clear. On bigger Ether/XRP selective enforcement/conflicts controversies? Whitewash. source.
These debates have fueled tensions in the crypto community, particularly among XRP supporters, who claim the SEC’s lawsuit against Ripple shows biased enforcement. The SEC’s findings on Hinman are unlikely to resolve these disputes, as calls persist for greater transparency in how the agency handles digital assets.
In a broader spectrum, the Hinman case highlights the challenges of regulating a fast-moving industry like crypto. While the SEC, under the new leadership of Paul Atkins, maintains its commitment to impartial oversight, some crypto enthusiasts and industry experts argue that unresolved questions about enforcement practices could undermine trust in the agency’s mission.