SEC Sued Over Delayed Report on Crypto Conflicts

Empower Oversight, a nonprofit watchdog group, has filed a lawsuit against the U.S. Securities and Exchange Commission (SEC) to compel the release of a long-awaited report on ethical conflicts and selective enforcement within the agency. The SEC Office of Inspector General (SEC OIG) completed the report over a year ago, but the SEC has yet to release it or provide related documents despite multiple Freedom of Information Act (FOIA) requests.

The lawsuit, filed today, seeks the disclosure of the final report, which examines potential conflicts of interest involving William Hinman, the former Director of the SEC’s Division of Corporate Finance. The report focuses on Hinman’s role in the agency’s decisions on cryptocurrencies, particularly his ties to his former law firm, Simpson Thacher, which had an interest in promoting Ether (ETH) over other cryptocurrencies.

Empower Oversight has been advocating for greater transparency from the SEC since August 2021, when it first requested communications between SEC officials and cryptocurrency entities. Over the past few years, the group has filed multiple lawsuits to secure access to documents, including those tied to Hinman’s 2018 speech declaring Ether not to be a security, while other similar cryptocurrencies were classified as unregistered securities.

Tristan Leavitt, president of Empower Oversight, criticized the SEC’s ongoing delays, calling its refusal to release the report “suspicious” and emphasizing the public’s need for transparency in light of the agency’s role in regulating the growing cryptocurrency sector.

With the SEC’s internal watchdog report still not released, Empower Oversight’s legal efforts continue as they press for clarity on the agency’s handling of conflicts of interest and cryptocurrency enforcement decisions.