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Ripple Labs’ Chief Legal Officer Stuart Alderoty made a statement expressing concerns about potential conflicts of interest involving former SEC official Bill Hinman. Alderoty stated that an investigation should be opened against Bill Hinman.
Alderoty’s statement came in response to John Reed Stark, who referred to various reports regarding Hinman’s conflicts of interest. According to former SEC official Stark, an FBI investigation should be conducted. If Hinman’s abuses are revealed, the US Department of Justice should take action.
Ripple Vs. SEC: The Hinman Speech Controversy
In 2018, William Hinman, who was then the Corporate Finance Director at the SEC, made a speech that has since become the focal point of controversy in the SEC’s lawsuit against Ripple. In mid-June, Ripple and Alderoty publicly disclosed the emails and drafts of the speech, revealing that Hinman ignored numerous warnings that the speech contained “unsupported analysis not grounded in law” and was “disconnected from the Howey factors”.
Despite claiming that the speech was his personal opinion, Hinman drew attention to inconsistencies, as stated by Alderoty:
Despite claiming that the speech was his personal opinion, he and the SEC presented it as a guidance.
This inconsistency is further highlighted by the fact that the speech remains on the SEC’s website despite its controversial nature.
A watchdog group called Empower Oversight is also trying to shed light on deeper connections between Joseph Lubin, co-founders of Ethereum, his company Consensys, Vitalik Buterin, and Hinman. Their recent release of documents obtained through the Freedom of Information Act (FOIA) request intensified scrutiny of Hinman’s 2018 speech.
The documents reveal that Joseph Lubin and his company Consensys played a much more central role in shaping the thoughts and objectives of then-SEC Corporate Finance Director William Hinman’s controversial cryptocurrency speech on June 14, 2018. This disclosure may be particularly important considering the SEC’s subsequent stance on cryptocurrencies they consider unregistered securities, such as XRP.
Call for Accountability
Alderoty emphasized the need for accountability and transparency. An investigation should be conducted to understand what or who influenced Hinman, why conflicts or at least the appearance of conflicts were ignored, and why the speech was launched knowing that it would create “further confusion” for the SEC.
Furthermore, the involvement of key players in Ethereum in influencing Hinman’s speech raises questions about the impartiality of the SEC’s decisions. The documents highlight meetings between Hinman and individuals with potential conflicts of interest, underscoring the need for a comprehensive investigation.
The events surrounding Hinman’s 2018 speech and the subsequent disclosures added a new layer of complexity to the narrative of crypto regulation. Along with calls for investigation and more transparency, the US-based crypto industry is expecting clarity and hoping for a fair and informed regulatory framework. As of the time of writing, the XRP price has dropped to $0.5970 but has risen to $0.6241.
