The U.S. Securities and Exchange Commission (SEC) has released a redacted report clearing former Corporation Finance Director Bill Hinman of ethics violations during his time at the agency. The review followed a lawsuit filed by watchdog group Empower Oversight, which had requested access to the findings under the Freedom of Information Act (FOIA).
The report addresses allegations related to Bill Hinman’s 2018 Ethereum speech, where he publicly stated that Ether was not a security. The SEC’s Office of Inspector General (OIG) concluded that Hinman did not violate internal ethics rules or federal conflict-of-interest laws, despite concerns about his financial ties to his former law firm.
The report’s release has renewed discussions surrounding ETH Gate, a term critics use to describe alleged regulatory favoritism and inconsistencies in the SEC’s approach to digital assets.
OIG Investigation and Ethics Disclosures
Empower Oversight alleged that Bill Hinman had ongoing financial ties to Simpson Thacher & Bartlett LLP (STB), a law firm connected to the Enterprise Ethereum Alliance. The group argued that these ties raised questions about impartiality when Hinman delivered his Ethereum speech in June 2018 at Yahoo Finance’s All Markets Summit: Crypto.
According to the OIG report, which came 2 days after the US Senate confirmed Paul Atkins as SEC Chair, Hinman disclosed his financial interest in STB during onboarding and followed the SEC’s Office of Ethics Counsel (OEC) guidance.
“We found that at the time of his onboarding at the SEC, Bill Hinman disclosed his financial interest in STB… and took the steps prescribed by SEC ethics officials,” the report stated.
It also concluded that his response to a job recruiter by referring them to a partner at STB and his “miscellaneous contacts” with the firm did not breach ethics regulations or guidance provided.
Findings on the Ethereum Speech and Internal Pushback
The report reviewed the preparation and delivery of the Ethereum speech, stating that Hinman followed the applicable rules. However, critics pointed to redactions in the report and noted that the SEC’s Office of General Counsel had opposed parts of the speech.
Records show that Hinman initiated the internal conversation with an email titled “ether speech.” Despite objections from legal staff, Hinman moved forward with the remarks. Empower Oversight argued that this indicated the process was not as collaborative as the OIG report suggested.
“Even if true, the facts alleged do not amount to a conflict of interest on Hinman’s part.”
Public Reaction and Continued ETH Gate Debate
The response to the OIG’s conclusions has included questions about how conflicts of interest are defined and enforced within federal agencies. CryptoLaw, a group following the case, wrote on X, “The @SECGov OIG actually said that EVEN IF Hinman had a direct financial interest in ETH, his 2018 speech declaring ETH to not be a security would not amount to a conflict of interest.”
Amid this debate, the US SEC released guidance on which assets are securities and which aren’t to avoid confusion. Concurrently, journalist Eleanor Terrett also commented on the finding, stating,
“It sounds like the OIG is saying here that if a person in a position of authority has a direct financial interest in something they then make a market-moving statement about, it’s not a conflict of interest?”
These statements have fueled further discussion around ETH Gate, with some calling for greater transparency in how ethics policies are applied to high-level agency officials.
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