Empower Oversight Sues SEC for Withholding Crypto-Related Report

Empower Oversight has filed a lawsuit against the U.S. Securities and Exchange Commission (SEC) to obtain the final report on the agency’s decision-making regarding crypto-related issues.

The SEC Office of Inspector General (SEC OIG) completed the report over a year ago, but the agency has not yet disclosed it or provided the related documents despite receiving multiple Freedom of Information Act (FOIA) requests.

Conflicts of Interest and Delayed Report

According to the February 4 filing, the case is asking for the release of a long-awaited report on ethical conflicts and selective implementation within the agency. The suit is also seeking related documents concerning former SEC official William Hinman, who has been at the center of conflict-of-interest allegations.

Hinman, the former Director of the regulator’s Division of Corporation Finance, allegedly received payments from his former law firm while influencing enforcement decisions on crypto.

“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.

He added that transparency and honesty could significantly address the widespread, legitimate concerns about the financial watchdog’s behavior and hold its officials accountable for their role in the controversy.

The SEC has long faced criticism for its approach in the crypto industry. Critics argue that it has been inconsistent and overly aggressive, targeting specific companies and projects while leaving others. Several industry leaders have spoken out, including Coinbase, which sued the agency for failing to provide clear regulatory guidance.

Former SEC Chair Gary Gensler also faced backlash for leading numerous litigation against major crypto firms including Coinbase and Ripple. Many critics argued that his approach was overly harsh and created uncertainty within the sector.

Years of Delayed Transparency and Communication

Since August 2021, Empower Oversight has pressed the SEC for more transparency about its decision-making on crypto issues.

The organization initially lodged a FOIA request for communications between SEC officials and external entities and later sued the agency in December 2021 to force compliance. It has also taken similar measures in a bid to uncover potential conflicts of interest involving William Hinman.

Over the years, it has filed multiple lawsuits challenging the commission’s reluctance to release documents. This includes cases brought up in May 2023 and March 2024 over delayed responses.

The nonprofit has also sought records concerning former SEC Chairman Jay Clayton’s role in digital asset regulation. In June and July 2024, it also urged the SEC-OIG to release its report on conflicts of interest and concerns over selective implementation practices.

By late 2024, the organization called for congressional oversight and submitted additional FOIA requests for the OIG’s final report. However, the SEC has continued to delay responses resulting in the latest filing.