Attorney John Deaton, a lawyer representing 65,000 XRP holders in the ongoing lawsuit between Ripple Labs and the United States Securities and Exchange Commission (SEC), has recently stated that a breach of ethics could spell the regulator’s end in its legal tussle against the San Francisco-based cross-border payment firm.
The lawyer pointed to documents uncovered by Empower Oversight, an anti-corruption watchdog, involving William Hinman, the SEC’s former Director of Corporate Finance, coupled with the controversial 2018 speech, where Ethereum is considered not a security.
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As stated by Empower Oversight, the emails uncovered suggest that Hinman knowingly had a conflict of interest before delivering the speech.
According to Deaton, if the allegation can be proven before the judge, it would mark the end of the SEC in the lawsuit filed against Ripple Labs in December 2020.
John Deaton tweeted, “Empower Oversight and Jason Foster retrieved the emails below. If Hinman didn’t submit the speech to conflicts screening it is game set & match. The Ethics Office is going to be pissed and want to throw him under the bus if we force this investigation through letters from Congress.”
@EMPOWR_us and @JsnFostr retrieved the emails below. If Hinman didn’t submit the speech to conflicts screening it is game set & match. The Ethics Office is going to be pissed and want to throw him under the bus if we force this investigation through letters from Congress. pic.twitter.com/8j9Nwb0OZn
— John E Deaton (@JohnEDeaton1) May 11, 2022
As stated in a statement released by the anti-corruption watchdog, Hinman had a connection with a law firm known as Simpson Thacher, which promoted Ethereum (ETH).
According to the group, Hinman had failed to disclose his connection with law firm, adding that the speech subsequently boosted the price of Ethereum (ETH) back then.
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Empower Oversight noted:
“[Our] FOIA request shows that the SEC’s Ethics Office cautioned Mr. Hinman that he had a direct financial interest in his former law firm, Simpson Thacher, and thus, he needed to recuse himself from any matters that would affect the firm; and, lest he may have misunderstood its position, the Ethics Office explicitly told him not to have any contact with Simpson Thacher personnel.
“The records disclosed to Empower Oversight and other information tend to show that Mr. Hinman failed to disclose Simpson Thacher’s, and by extension his, direct financial interest in the Enterprise Ethereum Alliance…
“In his speech, he opined that Ether is not a security, stating that ‘based on my understanding of the present state of Ether, the Ethereum network and its decentralized structure, current offers and sales of Ether are not securities transactions.’ Ether’s value rose immediately after Mr. Hinman’s speech.”
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