FOIA Update
March 14, 2024

WASHINGTON – Years into a quest to uncover information about how the Securities and Exchange Commission (SEC) made decisions about its regulation of cryptocurrencies, Empower Oversight is seeking new, specific cryptocurrency-related communications of William Hinman, the Director of the Division of Corporate Finance at the SEC from 2017-2020, and Jay Clayton, the former Chairman of the agency.

Empower filed a Freedom of Information Act request seeking to “[u]nderstand whether Mr. Hinman’s and Mr. Clayton’s relationships with private sector firms, companies and individuals improperly influenced any of the official actions during their time at the SEC, and to what extent the SEC and its ethics officials mitigated, investigated, and resolved such conflicts.”

Empower’s latest request asks for communications from May 2017 and December 2020 with new key words, email addresses and private entity names based on materials gleaned from previous requests.

More than two years ago, Empower began pressing the SEC for transparency in how the agency was making decisions on cryptocurrency issues. Despite very little cooperation from the SEC, Empower learned through previous FOIA requests that Hinman had met with entities that had an interest in the cryptocurrency that the SEC was regulating. After one of those meetings, Hinman had declared in an August 2018 speech that Ether was not a security.

Empower also outlined concerns about public statements made by former SEC Chairman Jay Clayton that affirmed previous Hinman statements about Ether and also declared that Bitcoin, another cryptocurrency, was not a security. At the end of Clayton’s tenure, the SEC filed suit against Ripple Labs alleging that its XRP currency was a security. After leaving the SEC, Clayton reportedly joined cryptocurrency hedge fund One River Asset Management, which focuses exclusively on Bitcoin and Ether (not XRP).

To read Empower’s full letter, click here.

Empower also has outstanding FOIA requests with the SEC and has already filed suit to receive several batches of information to help shed light on the inappropriate behavior of Hinman and Clayton during their time at the SEC. Empower recently learned that the SEC Office of Inspector General (IG) was in “final stages” of an investigation on crypto conflicts that were referred to the IG by Empower.

Click here to read more.

Background of Empower SEC FOIA efforts

Since August 2021, Empower Oversight has pressed the SEC for more transparency about the decision making on cryptocurrency issues at the SEC. The agency slow-walking and bad faith over nearly three years has forced litigation to pry documents loose from the agency.

In August 2021, Empower submitted a detailed FOIA request to the SEC seeking all communications between senior SEC officials, their former and future employers, and related entities regarding cryptocurrencies. Since then, Empower has been at the forefront of the battle for SEC transparency. In December 2021, Empower 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.

In May 2022, Empower sent a referral to the SEC OIG 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 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.

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 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. 

In Dec. 2022, Empower 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 more than a year earlier. 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 by name.

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.

In May 2023, Empower filed a new complaint against the 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.

The SEC turned over documents following the May FOIA lawsuit brought by Empower in the District of Columbia from a December 2022 FOIA request to the SEC. Pursuant to the FOIA request and the lawsuit, the SEC produced 324 pages of additional documents.

In September 2023, Empower requested through FOIA communications between Clayton, the former SEC Chairman, and numerous people he may have interacted with regarding the agency’s improper handling of cryptocurrency enforcement decisions.