The legal battle between the American regulator Securities and Exchange Commission (SEC) and the Blockchainbedrijf Ripple has been given a surprising turn. New developments cast a shadow over the integrity of the SEC and ensure increasing uncertainty surrounding the case.
Uncertainty about SEC’s strategy
The uncertainty began when the SEC hinted that it might not be appealing against the ruling on the sale of XRP tokens via Programmatic Sales. This doubt further increased when the SEC suddenly moved into her case against Crypto-Ex-Exchange Coinbase (Coin). This led to speculation that the supervisor might also take a step back in the case against Ripple. Yet the legal situation around Ripple is a lot more complex, which makes it less likely that the SEC will apply the same tactics here.
Research reveals possible abuses within SEC
The situation became even more complicated when a recent investigation by the Office of Inspector General (OIG) possibly revealed proof of conflicts of interest within the SEC. Former SEC chairman Gary Gensler is said to have withheld the results of this study before he resigned. Since then, acting chairman Mark Uyeda and Commissioner Hester Peirce have not heard anything, which feeds the rumors that the report contains burdensome material about the working method of the regulator.
The non-profit organization Empower Oversight (EO) was the first to read the alarm about possible conflicts of interest in the SEC. This led to the OIG study, in which former SEC director Bill Hinman is central. Hinman is under fire because of possible favoring within the crypto sector.
Role of Bill Hinman in the controversy
In 2018, Hinman caused a stir by declaring that Bitcoin (BTC) and Ethereum (ETH) are not effects. This statement had a major influence on the markets and offered clarity to investors. However, his close ties with the law firm Simpson Thacher, which actively promoted Ethereum, argued suspiciously.
During his employment with the SEC, Hinman continued to keep in touch with Simpson Thacher, despite warnings from the Ethics Division of the SEC. Moreover, he would have received millions of dollars in financial benefits from the law firm. After his departure at the SEC, he returned to Simpson Thacher, which further strengthened the suspicions of conflicts of interest.
Credibility of the sec at stake
If the OIG report actually confirms unethical behavior within SEC, this can seriously harm the credibility of the regulator. Proof of abuses would undermine the lawsuit against Ripple and possibly other crypto companies. Due to the lack of transparency, Empower Oversight and Fox Business journalist Eleanor Terrett have now requested the full content of the OIG report via the Freedom of Information Act (FOIA). Since the sec refuses the findings
What does this mean for Ripple?
If the abuses actually come to light within the SEC, this can be a game check for Ripple. It would not only seriously affect the credibility of the lawsuit against Ripple, but possibly even leads to a withdrawal of the case by the SEC. This would mean a huge victory for Ripple and XRP, which in turn could have a positive effect on the price of the crypto coin. Moreover, the entire regulation landscape for crypto in the US could be under discussion, which has broad implications for the sector.
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Source: https://newsbit.nl/rechtszaak-sec-vs-ripple-neemt-schokkende-nieuwe-wending/
