Crypto News

SEC Under Fire: Empower Oversight Sues for Hinman Investigation Amid XRP Price Uncertainty

February 9, 2025
Smart Money

Whistleblower Empower Oversight Sues SEC for Disclosure of OIG Findings

Background on the Case

Empower Oversight, a U.S. whistleblower organization, has initiated a lawsuit against the Securities and Exchange Commission (SEC), seeking the release of findings from the Office of Inspector General (OIG). The lawsuit follows Empower Oversight’s referral of an alleged conflict of interest involving the SEC to the OIG in 2022. This investigation highlights controversies surrounding William Hinman, the former SEC Director of the Division of Corporation Finance, who made significant statements about cryptocurrencies.

In 2018, Hinman declared that Bitcoin (BTC) and Ethereum (ETH) should not be classified as securities. At the time, he was still connected to his former employer, law firm Simpson Thacher, which has been known to promote projects related to Enterprise Ethereum. Empower Oversight’s previous legal battle against the SEC in 2021 claimed that Hinman received substantial financial benefits from Simpson Thacher while playing a crucial role in shaping crypto regulations at the SEC.

Hinman’s Involvement in Ripple’s Legal Challenges

The scrutiny surrounding Hinman intensified as he participated in a panel discussion on regulatory issues, particularly under the new Trump administration. John E. Deaton, an attorney acting as an amicus curiae, shared insights from the panel on social media, expressing concerns over Hinman’s relationships with former colleagues. Deaton highlighted that many divisions within the SEC were involved prior to Hinman’s speech on Ethereum, except for the Ethics Division, which had issued warnings about possible conflicts of interest.

Additionally, the SEC has been striving to keep certain documents related to Hinman’s statements under attorney-client privilege during the ongoing legal struggle against Ripple Labs. Despite the agency’s multiple attempts to shield these documents, they remain unprotected, revealing that Hinman continued interactions with Simpson Thacher staff despite previous warnings from SEC’s Ethics Division.

The Ongoing Lawsuit and Speculations

As Empower Oversight continues its pursuit for the OIG’s findings, the SEC remains under pressure to respond effectively. This has spurred speculation that the agency may consider withdrawing its appeal in the Ripple case. The SEC’s appeal follows Judge Torres’ ruling in July 2023, suggesting that Programmatic Sales of XRP do not meet the criteria of the Howey Test—an essential framework for determining whether an asset is a security.

On January 15, the SEC submitted an opening brief related to the appeal after obtaining the OIG’s findings. This move came just before Gary Gensler stepped down as SEC Chair.

Implications for XRP and Market Trends

The potential actions taken by the SEC will undoubtedly influence the price trajectory of XRP. Should the SEC choose to withdraw its appeal, experts predict a significant price rally for XRP, possibly exceeding its previous peak of $3.5505 and reaching towards $4. This shift could also pave the way for the SEC to approve XRP spot ETF applications, subsequently increasing institutional demand for the cryptocurrency.

Conversely, if the SEC maintains its appeal, market analysts forecast that XRP could drop to around $1.50. Current market analysis indicates that despite a recent uptick, XRP remains below the 50-day Exponential Moving Average (EMA) but is holding above the 200-day EMA. This situation signals bearish conditions in the short term but offers bullish prospects for the long term.

Currently, XRP stands just below the critical resistance level of $2.50, with potential bullish momentum towards the 50-day EMA. Should XRP fall below $2.30, it may seek support at the $1.9299 level, exposing it to further declines. A move below this could take it to the February 3 low of $1.7024. The current Relative Strength Index (RSI) reading of 38.12 indicates that XRP may further decline before reaching oversold territory, defined as an RSI below 30.

Conclusion

The ongoing tension between Empower Oversight’s lawsuit and the SEC’s response, coupled with the implications for Hinman and the future of XRP, continues to shape the cryptocurrency landscape. As the SEC grapples with internal and external pressures, the outcomes of these legal battles could have lasting effects on regulation and market dynamics.