Pressure Mounts on Gensler to Release IG Report as New Letter Exposes XRP’s Unfair Treatment and Ethereum’s Free Pass
Empower Oversight is calling on Congress to release the SEC Inspector General’s report on the conduct of former Chairman Jay Clayton. As a nonprofit focused on government accountability, they questioned Hinman, who served as director of the SEC’s Division of Corporate Finance from 2017 to 2020.
The group found documents indicating Hinman may have violated ethics rules regarding conflicts of interest and sent evidence to the SEC Office of Inspector General in May 2022. In February 2024, the SEC Inspector General stated that the investigation was nearly complete. The report could support their investigation until Clayton is confirmed as the U.S. Attorney for the Southern District of New York.
What did Zinman say in his controversial 2018 speech?
In 2018, Hinman gave a high-profile speech stating that Ethereum’s digital token, ether, was not a security, which caused an immediate increase in the price of Ethereum. This raises questions about whether Hinman broke the law by promoting Ethereum while having a financial conflict of interest.
He said: “Based on my understanding of the current status of Ethereum, the Ethereum network and its decentralized structure, the current quotations and sales of Ethereum are not securities transactions.”
Outside groups, including Consumer Action for a Strong Economy (CASE), continue to urge the SEC to release the report. Pro-XRP lawyer John Deaton wrote: “It’s time to release the report @GaryGensler If we are to move forward – we will do so with complete transparency. If Gensler does not release this report, Paul Atkins needs Release it immediately. @HesterPeirce and others should call for it to be released.”
XRP and SEC:
The issue also surrounds a lawsuit filed on Dec. 22, 2020, in the final days of the Trump administration. SEC Chairman Jay Clayton and SEC Division of Corporate Finance Director William Hinman sued Ripple Labs, its co-founder Chris Larsen, former CEO and executive chairman, and current CEO Brad Garlinghouse. The lawsuit accuses them of selling $1.3 billion worth of the XRP cryptocurrency as unregistered securities.
Tristan Leavitt said in his 22-page letter: writes SEC Commissioner Joseph Grundfest that the SEC’s actions against XRP are problematic.
Grundfest wrote to the SEC and said: “The staff has not made clear that there are no material differences between the operations of ETH and XRP that are relevant to the application of federal securities laws. Imposing securities law obligations on XRP, while leaving ether unaffected, would raise concerns about The issue of fundamental fairness in the committee’s exercise of discretion should be treated similarly for Ethereum and XRP.
