New FOIA Request Explores Potential Conflicts of Interest at the SEC

The U.S. Securities and Exchange Commission (SEC) has come under scrutiny once again, this time as a result of the pursuit of transparency and accountability led by Empower Oversight and Steven Nerayoff, an early advisor to Ethereum.

Jason Foster, Founder of Empower Oversight, recently made headlines by filing a new Freedom of Information Act (FOIA) request that targets Jay Clayton, the SEC’s former Chairman. The organization’s primary focus is on potential conflicts of interest that may have influenced Clayton during his tenure at the SEC.

In December of last year, Empower Oversight issued a FOIA request centered around Clayton’s association with One River Asset Management. This latest request seeks to obtain communications Clayton had with individuals like Jasmine Burgess and John D’Agostino from May 2017 to December 2020.

Why Is This Important?

This FOIA request gains significance from the fact that Clayton joined One River Asset Management after leaving the SEC. This crypto hedge fund primarily deals with Bitcoin and Ether, both cryptocurrencies that benefited from the SEC’s selective enforcement actions. Notably, during Clayton’s tenure, the SEC filed a lawsuit against Ripple Labs, classifying XRP as a security, a move that left the XRP community baffled and enraged.

Attorney John Deaton, representing thousands of XRP holders, pointed out Clayton’s lack of transparency with other SEC commissioners.

Bill Morgan, a pro-XRP lawyer, commended Empower Oversight’s FOIA submission as a “perfect summary” of Clayton’s conflicting interests.

Ethereum’s “Free Pass” under Question

Simultaneously, Steven Nerayoff, an early advisor to Ethereum, openly criticizes the SEC’s historical treatment of cryptocurrencies. Nerayoff’s critique is specifically directed at William Hinman, the former director of the SEC’s Division of Corporation Finance, for his pivotal 2018 speech, in which he declared Bitcoin and Ethereum as non-securities, effectively granting Ethereum a “Free Pass.” Nerayoff’s comments add fuel to the calls for transparency and raise questions about the SEC’s alleged bias.

Steven Nerayoff’s criticisms center around the secrecy and alleged bias in this formative regulatory milestone. Nerayoff goes further, insinuating that the SEC is “hiding more than motives” behind Hinman’s speech. The intertwining of these two issues portrays an SEC that may be playing favorites, or at the least, hiding some important information.

And thus, the search for clarity and accountability continues….