SEC sued by watchdog group over withheld crypto report

Empower Oversight has filed a lawsuit against the U.S. Securities and Exchange Commission for failing to disclose a long-awaited report on ethical conflicts and selective enforcement within the agency.

The SEC Office of Inspector General completed the report more than a year ago, but the agency has yet to release it despite repeated Freedom of Information Act requests, according to the lawsuit.

The lawsuit seeks to compel the SEC to disclose findings related to former SEC Division of Corporate Finance Director William Hinman. 

The investigation focuses on potential conflicts of interest involving Hinman’s ties to his previous law firm, Simpson Thacher, which had financial interests in promoting Ethereum (ETH). 

SEC’s ‘silent treatment’

Empower Oversight has pursued SEC transparency since August 2021, filing multiple FOIA requests and lawsuits seeking documents related to agency communications with crypto entities. The watchdog argues that the SEC’s delays suggest a pattern of avoiding accountability in its enforcement actions.

“The SEC’s silent treatment is old and tired, and its refusal to release these records is, quite frankly, suspicious,” said Tristan Leavitt, president of Empower Oversight. 

Leavitt emphasized that transparency is essential to addressing concerns over regulatory bias and ensuring accountability in the crypto sector.

The SEC has faced mounting criticism for its regulatory approach, with industry leaders, including Coinbase, accusing the agency of selective enforcement. 

Former SEC Chair Gary Gensler also faced scrutiny for aggressive litigation against major crypto firms like Coinbase and Ripple.

Empower Oversight remains committed to obtaining the SEC OIG report, arguing that public access to the findings is necessary to evaluate the agency’s handling of crypto regulations.