Thread by @JohnEDeaton1

THE WILLIAM HINMAN CONFLICT OF INTEREST - How Bad was it? A 🧵

https://twitter.com/johnedeaton1/status/1552301564890587142

For over a year, I wouldn’t accuse Hinman of violating the law. I only maintained that he may have and that the appearance of impropriety deserved an investigation. Since then however we’ve learned that @EMPOWR_us caught the @SECGov in a lie, trying to cover up the issue.

The SEC claimed there were no emails or documents responsive to @EMPOWR_us’s FOIA Request.

Empower sued the SEC in federal court and discovered that there are in fact emails related to a conflict and the SEC was forced to turn some of those emails over.

After reading those emails, it is obvious that Hinman was in violation of the criminal financial conflict laws of the United States.

THIS IS NOT AN ALLEGATION - IT IS A FACT!

Some might argue this is my opinion. NOPE. If I gave an opinion and was wrong, I could be liable to Hinman for libel, slander and defamation. He’s welcome to sue me b/c truth is a complete defense against defamation. As a former federal prosecutor, this is an EASY case to prove.

When we discuss the conflicts we usually discuss his speech giving #ETH a free pass while his law firm, Simpson Thacher, was a member of the EEA. That is a MASSIVE CONFLICT. But it is not the only one. He will claim he was unaware of the EEA membership at the time of the speech.

Simpson Thacher is is already attempting to help Hinman control the narrative by informing @EleanorTerrett that the membership in the EEA was no big deal and in fact they are no longer a member. IT WAS A HUGE DEAL and it can’t be trivialized.

But it wasn’t the only HUGE conflict regarding his relationship with Simpson Thacher. We know about the EEA membership. But Hinman also declared #Bitcoin NOT A SECURITY during that speech. Was there ever a #Bitcoin connection with Simpson Thacher while Hinman was a Director?

Of course there was. In 2019, while Hinman was Director of Corporation Finance, Simpson Thacher led the IPO of Canaan - A Chinese company that sells - wait for it:

#Ethereum and #Bitcoin mining hardware.

After Hinman’s Division of Corpration Finance (the Division that approves IPOs) approved the Simpson Thacher led Canaan IPO, Canaan was sued for fraud and misrepresentation related to that IPO.

decrypt.co/21651/bitcoin-…

To truly appreciate the Conflict, you must understand Hinman claimed he “retired” from Simpson Thacher and was only receiving a pension. NOT TRUE. As determined - not by me - but by the SEC Ethics Chief - he was an active ongoing profit-sharing partner with Simpson Thacher. 👇👇

That means he was an ACTIVE partner - not a former retired partner collecting a pension. In 2017 he received $7.8M in partnership income in addition to 1.5M in a pension. In 2018 he received $1.8M in partnership income in addition to
$1.5M in a pension.

Hinman was being paid pursuant to his then-profit-sharing arrangement WHILE HE WAS WORKING AT THE SEC.

In a financial arrangement like Hinman’s,
STRICT CRIMINAL CONFLICT laws are in effect. 👇

The criminal conflict laws are violated if you allow even the “APPEARANCE OF IMPROPRIETY” to exist. The law is violated even if there is no actual impropriety. When you are an active profit-sharing partner at your law firm you are NOT ALLOWED 🚫 ANY CONTACT. No emails. No calls.

“Extraordinary payments from your former employer” force you to recuse yourself from any appearance issue. Below👇 lists more than $10K as extraordinary. I think $15M qualifies. But you need to understand how Hinman’s situation was worse. It wasn’t his former employer paying him.

He was an active profit-sharing partner at Simpson Thacher. The better the firm did financially the better he did. Because of that scenario you MUST honor the conflict laws. That means NO CONTACT - as in - NONE WHATSOEVER.

It may seem overly strict to some, but that is the law. And Hinman gave the law and his own Ethics Chief the middle finger.🖕

The SEC emails prove he had 3 MORE meetings w/his law partners after being told to stop 🛑 by the Ethic’s Chief.

Imagine reading his non-SEC emails.

So when Hinman eventually makes a public statement and claims that he didn’t know anything about the EEA membership understand:
THAT IS THE EXACT REASON you honor the criminal ethics bar and have no contact. If he didn’t have any contact then it wouldn’t look as bad as it does.

He declared #BTC & #ETH non-securities. His firm led the IPO of Canaan which sold #BTC & #Ether hardware. He was a profit sharing partner at Simpson sharing in the profits from fees racked up representing Canaan and others while he was at the SEC. He benefited from his speech!

A monkey 🙊 could prove he was in violation of United States criminal financial conflict laws. He was in violation whether he knew or didn’t know about the EEA or the Canaan IPO b/c he was told to stop meeting his partners at Simpson Thacher and he continued to do so.

I know for a fact that the SEC Ethics office DID NOT screen Hinman’s speech for conflicts. How do I know it for a fact? Because it would take less than 15 minutes for a blind deaf monkey 🙊 to find the conflicts. The conflicts screening on his speech would go something like this:

You read the speech. You notice UNLIKE ANY OTHER TIME IN SEC HISTORY, a senior leader at the SEC is publicly discussing specific tokens and projects and declares #Bitcoin and #ETH non-securities outside the registration requirements of the SEC. Its HUGE MARKET MOVING NEWS.

You immediately make sure Hinman has NO CONFLICTS related to #BTC & #ETH. First thing is making sure he or his family do not own any #BTC or #ETH. You simply ask him. Hinman answers: No. That takes one minute to ask or a one minute email.

Next you check the law firm paying him.

You don’t need non-public info from him. You check the public form he filed 6 months earlier (Jan 2018) and see that Simpson Thacher paid him $7.8M in 2017 in profits and that he is going to make more than $4M in profits for 2018. You then do a basic check into Simpson Thacher.

Next, you check if Simpson Thacher has a connection to #BTC or #ETH. A Google search would’ve discovered the EEA membership. See for yourself below.

The Ethics Chief told Hinman he couldn’t have lunch, talk to, or even email his law firm. So do you think she cleared the speech?

https://twitter.com/CryptoLawUS/status/1529902230605811733

On November 21, 2019 Chinese mining rig Canaan launched its initial public offering (IPO) sale of $90 million worth of U.S. shares.

Attorney Lin, one of Hinman’s partners at Simpson Thacher in China, wanted to meet w/ Hinman 3 months before the IPO. I’m sure its a coincidence.

https://twitter.com/bpcostello/status/1553401848001806336

Let’s make something crystal clear about the Hinman Speech and the Ethics issues surrounding it. @WarrenDavidson asked @SECEnfDirector, @GurbirGrewalNJ, a very specific question:

Warren asked: “Is it true that Director Hinman submitted the speech to Ethcis?”

@SECEnfDirector responded that he cannot answer that question b/c of the ongoing litigation in the @Ripple XRP case.

See 👇 (around 1:06 mark)

As Amicus Counsel I’m very familiar w/the “ongoing litigation” in the case. What’s being litigated regarding the speech is w/r the 58 drafts, along w/ people’s comments attached to the emails must be turned over to Ripple or w/r the Drafts, comments and emails are privileged.

Whether Hinman had the speech screened by the Ethics Office

IS NOT

being litigated. Whether he had it approved by Ethics or not IS NOT at issue in the case! In fact, its IRRELEVANT to any issue being litigated.

Whether the speech was approved by Ethics doesn’t matter one way or the other. It has nothing to do with whether XRP is or isn’t a security. It is irrelevant to whether Ripple has fair notice of the law. Whether the speech was approved by Ethics is an internal SEC matter.

In other words, the @SECEnfDirector could have easily answered Congressman Davidson’s question. He intentionally chose to not answer the question and HIDE the truth. @GurbirGrewalNJ could’ve said, IF TRUE, “the speech was screened for conflicts prior to Hinman delivering it.”

IF TRUE, what harm could come from saying that? None.

At a minimum @GurbirGrewalNJ could’ve said: “I can’t get into specifics but all proper procedures were followed regarding Director Hinman’s speech.”

Instead he refused to answer the question on an absolute bogus BS reason.

IF TRUE, Hinman himself could come out and say “I won’t get into specifics but the speech was approved by the Ethics office before I delivered it.”

There is NOTHING stopping him from uttering those words except for one thing:

The Truth

Since the @SECEnfDirector won’t provide an answer to Congress and Hinman won’t answer, I guess we have to look for the TRUTH through the facts. The #XRPCommunity looked for the answer ourselves. We went to the privilege logs and the email chain containing the speech.

The bottom line is that when you look at all the different names and all the different Divisions that are on the email chain attaching the speech, the one office not on the email chain is the Ethics Office or Ethics Chief.

You know who’s name is MISSING on all the privilege logs and emails?

DANAE SERRANO

The Ethics Chief who sternly informed Hinman he was barred by the criminal financial conflict laws. See 👇👇👇

The Truth Rests.