Crypto News

Empower Oversight vs. SEC: Unraveling Hinman’s Crypto Conflicts and XRP’s Price Potential

February 12, 2025
Smart Money

Empower Oversight Sues SEC for Disclosure on Hinman Investigation Findings

A United States whistleblower organization, Empower Oversight, has taken legal action against the U.S. Securities and Exchange Commission (SEC), calling for the disclosure of the findings from the Office of Inspector General (OIG). This lawsuit is rooted in Empower Oversight’s referral of an alleged conflict of interest related to cryptocurrency regulations to the OIG back in 2022.

Background on the Investigation

The ongoing investigation by the OIG focuses on William Hinman, the former SEC Director of the Division of Corporation Finance. In 2018, Hinman made headlines by asserting that Bitcoin (BTC) and Ethereum (ETH) should not be classified as securities. However, at the same time, he was linked to Simpson Thacher, a law firm actively promoting Ethereum, raising questions about potential conflicts of interest.

Before the referral to the OIG, Empower Oversight had already initiated a lawsuit against the SEC in 2021, alleging that Hinman had received millions of dollars from his former employer while playing a significant role in shaping the agency’s regulatory stance on cryptocurrencies.

Hinman’s Involvement in Ripple’s Legal Issues

The investigation has gained increased attention in light of Hinman’s recent appearance as a panelist addressing regulatory advancements under the Trump administration. During the panel, attorney John E. Deaton, who represents parties interested in the ongoing legal battles involving Ripple, highlighted Hinman’s comments, implying that recent experiences had made attendees wary of engaging with SEC proceedings.

Deaton also scrutinized the circumstances surrounding Hinman’s remarks about Ethereum, pointing out that several divisions within the SEC were involved in the review of the speech’s draft, yet the Ethics division was notably absent. He noted that Hinman had been advised multiple times that he was breaching financial conflict laws due to his continued meetings with partners from Simpson Thacher, a firm whose interests were before the SEC at the time.

Furthermore, Deaton revealed that the SEC had made six unsuccessful attempts to invoke attorney-client privilege to shield documents relating to Hinman’s Ethereum speech from being disclosed in the Ripple case. Despite warnings from the Ethics Division about his meetings with Simpson Thacher employees, Hinman continued these interactions.

The SEC’s Stance and Ripple Appeal

Despite the pressure from Empower Oversight and the changes occurring within the SEC, the agency has yet to release the OIG’s findings. Speculation is mounting that the SEC may consider pulling its appeal in the Ripple case. The agency had filed an appeal brief on January 15, shortly after receiving the OIG’s findings but before Gary Gensler’s departure as SEC Chair.

The appeal seeks to contest Judge Torres’ ruling from July 2023, which concluded that the Programmatic Sales of XRP did not meet the third prong of the Howey Test—an essential factor in determining whether a cryptocurrency qualifies as a security.

XRP’s Market Response

The impending decisions regarding the SEC’s appeal could have significant repercussions for XRP’s market performance. Should the SEC withdraw its appeal, analysts anticipate a potential surge in XRP’s price, possibly exceeding its previous all-time high of $3.5505 and reaching the $4 mark. A withdrawal might also pave the way for the approval of XRP-spot exchange-traded fund (ETF) applications, heightening institutional interest.

Conversely, if the SEC presses forward with its appeal, XRP’s price could experience a decline, potentially falling to around $1.50. Recent price actions show XRP is currently struggling below its 50-day Exponential Moving Average (EMA) while maintaining a position above its 200-day EMA, suggesting bearish short-term trends but bullish long-term outlooks.

Analysts are watching closely; a rise back to $2.50 could see bull traders eyeing the 50-day EMA as the next target. However, if XRP dips below $2.30, it would bring the $1.9299 support level into focus, with further declines possibly heading toward the February 3 low of $1.7024.

Currently, XRP’s 14-day Relative Strength Index (RSI) reads at 38.12, indicating that it could be on the verge of entering oversold territory if it drops below the $2 mark.

As the situation develops, both the SEC’s legal strategies and Hinman’s controversial background will remain pivotal points of discussion in the ongoing narrative surrounding cryptocurrency regulation in the United States.