WASHINGTON — Empower Oversight received just under 200 pages of emails from the U.S. Securities and Exchange Commission (SEC) responsive to its FOIA request for records that could shed light on allegations of conflicts of interest associated with the SEC’s selective enforcement actions involving cryptocurrencies. This comes on the heels of over a thousand pages of documents that the SEC released to Empower Oversight in February.
Among other things, the documents show that the SEC ethics office cautioned former SEC official William Hinman that he had a direct financial interest in Simpson Thacher, and thus, he must recuse himself from any matters that would affect the firm. Additionally, the ethics office explicitly told Hinman, per the documents, to not be in any contact with Simpson Thacher for any reason. However, Hinman met with Josh Bonnie, a partner at Simpson Thacher, at least three times after that warning. Hinman also met with the co-founders and investors in Ethereum ahead of a market-moving speech he gave in 2018 declaring the digital asset Ether to not be a security, despite Simpson Thacher’s participation in the Enterprise Ethereum Alliance, which is dedicated to promoting the commercial use of Ethereum. This raises questions as to whether Hinman fully disclosed Simpson Thacher’s role in Ethereum from SEC ethics officials and whether they would have approved the meetings or his speech if he had.
“The latest documents provided by the SEC raise more questions than they answer. We will continue to press the SEC for more meaningful and more timely transparency on this issue,” said Jason Foster, Empower Oversight Founder and President.
Among the new documents released are an April 28, 2017 email containing “initial guidance” from the Office of Government Ethics (“OGE”) that receiving retirement benefits calculated “based on the profits” Simpson Thacher would mean that Hinman “could not participate in any SEC particular matters that would directly” benefit the firm because the “future interest is enough to give you a full financial interest in the firm.” Also, a January 24, 2018 email reiterated the point to Hinman, “It occurs to us that you have a full financial conflict with your old firm, not just an impartiality one. [H]ence, you should not be having any meetings with your old firm, even group meetings” (emphasis added).
Empower Oversight filed its initial FOIA request with the SEC pertaining to potential cryptocurrency conflicts of interest back in August 2021. Since then, the group filed an appeal to the SEC’s denial of a fee waiver, which was won. After months of a lack of a response from the SEC, Empower Oversight filed a lawsuit against the agency in December 2021 to compel release of the responsive documents. A month later, Empower Oversight submitted another FOIA request with the SEC after the agency speciously claimed that there were no records responsive to some of the items of Empower Oversight’s initial request. Last month, the SEC released over a thousand pages to Empower Oversight, although many pages were either blank or contained duplicated information. Jason Foster published a Substack piece detailing why we need more transparency in the cryptocurrency realm. If you have first-hand information you’d like to disclose to Empower Oversight with these inquiries, please contact us confidentially here.