The impartiality requirements that apply to SEC employees have been brought to light by Prime Ripple attorney Stuart Alderoty, possibly reflecting prejudice in the commission’s views on various digital assets.
As Alderoty points out, all SEC employees must act impartially and maintain an appearance of impartiality in accordance with federal law, as is found in 5 CFR 2635.101(b)(14). The question that the law then poses is whether or not a cheap person with the knowledge would doubt the employees’ objectivity.
These comments follow the publication of the “Hinman emails,” a series of communications between William Hinman, a former SEC director, and SEC employees.
The emails organize the classification and regulation of numerous digital properties and were prepared for Hinman’s much-discussed lecture in June 2018. There were questions in the bitcoin community over Hinman’s claim that the two biggest cryptocurrencies weren’t securities in his opinion. Some people believed that the emails might show that the SEC has a bias in Favour of Bitcoin and Ethereum.
The emails reveal the internal discussions that took place within the powerful regulatory organization before to the SEC official’s speech, including the application of the Howey Test, which assesses whether or not an asset is a security under U.S. law.
Despite the doubts of several employees, Hinman continued to say in his address that he does not consider Bitcoin and Ethereum to be securities.
The release of the Hinman emails coincides with the ongoing legal dispute between Ripple and the SEC, which accuses Ripple of endorsing unregistered securities.
The legal team at Ripple has requested access to those emails as part of its security plan. Alderoty’s tweets highlight Ripple’s problems further and shed light on potential flaws in the SEC’s approach to crypto regulation.
