FOIA Update
August 3, 2023

WASHINGTON — Following two years of Freedom of Information Act (FOIA) requests and litigation, the Securities and Exchange Commission has now turned over new documents in response to Freedom of Information Act requests from Empower Oversight related to possible conflicts of interest in its cryptocurrency enforcement decisions.

The latest batch of documents follows a May FOIA lawsuit brought by Empower Oversight in the District of Columbia from a December 2022 FOIA request to the SEC.  Pursuant to the FOIA request and the lawsuit, the Securities and Exchange Commission (SEC) has produced 324 pages of additional documents.

The new documents establish:

  • Joseph Lubin and his company, Consensys, played a much more central role than previously known in driving then-SEC Director of Corporation Finance William Hinman’s thinking and goals with his controversial June 14, 2018, cryptocurrency speech. Lubin also appears to have been responsible for bringing Hinman and Ethereum creator Vitalik Buterin together as the speech drafting advanced. Lubin and Consensys are a prominent third party promoter of Ether, which was the focus of Hinman’s speech.  See documents here.
  • Investors and attorneys closely associated with Ethereum were prominent on the list of a March 28, 2018, meeting on a crypto safe harbor proposal. See documents here.
  • An August 22, 2019, email proves that Hinman met with Simpson Thacher partner Chris Lin while Lin was representing Canaan, a crypto mining client, before Hinman’s division on its IPO. This was contrary to advice on conflicts of interest rules, about which the SEC Ethics Office had repeatedly warned Hinman since he was receiving millions of dollars in payments from Simpson Thacher while at the SEC. See documents here. 

The SEC had initially agreed to search for records of communications between SEC officials and promoters of certain cryptocurrencies using a specific list of names that the SEC asked Empower Oversight to provide. However, the SEC then promptly reversed course and had refused to search for those records for nearly two years since the August 2021 request, which is still the subject of ongoing Freedom of Information Act (FOIA) lawsuit against the SEC. 

The December 2022 FOIA requests to the SEC sought communications between senior SEC officials and their former and future employers and related entities regarding cryptocurrencies.  Former senior SEC official William Hinman received millions of dollars in compensation from his former employer, Simpson Thacher, while helping guide the SEC’s enforcement decisions on cryptocurrencies. Simpson Thacher was part of a group that promoted the native cryptocurrency on the Ethereum network, Ether. Of particular interest is a June 14, 2018 speech where Hinman publicly declared that Ether was not a security while the SEC has claimed in enforcement actions that other similar cryptocurrencies were unregistered securities.

Since August 2021, Empower Oversight has sought numerous records through FOIA requests regarding the decision making on cryptocurrency issues at the SEC.

In August 2021, Empower Oversight submitted a detailed FOIA request to the SEC seeking all communications between senior SEC officials and their former and future employers and related entities regarding cryptocurrencies. Since then, Empower Oversight has been at the forefront of the battle for SEC transparency. In December 2021, Empower Oversight filed a lawsuit against the SEC in the Eastern District of Virginia seeking to compel the agency to provide responsive documents to the FOIA requests. On February 23rd of this year, Empower Oversight supported a motion with Judge Analisa Torres in the Southern District of New York to gain access to pertinent SEC documents.

In May 2022, Empower Oversight sent a referral to the SEC Inspector General based on documents that raised questions about the failure of the SEC and its Ethics Office to properly manage Hinman’s conflicts of interest regarding cryptocurrency issues, contacts with his former law firm Simpson Thacher, and that firm’s interest in promoting one cryptocurrency over others.

In October 2022, Empower Oversight filed its opposition to the SEC’s motion for summary judgment in the ongoing FOIA lawsuit over documents related to conflicts of interest and selective enforcement in cryptocurrency cases.

In Dec. 2022, Empower Oversight filed a new FOIA request regarding conflicts of interest and selective enforcement by former high-level officials regarding cryptocurrencies. The December 2022 request was an effort to counter the SEC’s bad faith gamesmanship in refusing to conduct searches using the search terms it solicited from Empower Oversight more than a year earlier. 

In May 2023, Empower Oversight filed a new complaint against the Securities and Exchange Commission (SEC) in the United States District Court for the District of Columbia seeking to compel the SEC to comply with the December 2022 FOIA request.

If you have first-hand information you’d like to disclose to assist Empower Oversight with these inquiries, please contact the organization confidentially here.