Former U.S. Securities and Exchange Commission (SEC) official Bill Hinman has been cleared of wrongdoing following a formal investigation into allegations that he acted improperly during his time at the agency. The controversy centered around Hinman’s 2018 public speech, in which he declared that Ethereum was not a security — a statement that has since played a major role in how digital assets are interpreted under U.S. law. The statement fueled years of backlash, particularly from the XRP community, who accused the SEC of selective enforcement for favoring Ethereum while aggressively pursuing Ripple, the company linked to XRP.

Hinman, who joined the SEC in 2017 after a lengthy legal career at Simpson Thacher & Bartlett — a law firm with ties to Ethereum through its participation in the Enterprise Ethereum Alliance — was accused by watchdog group Empower Oversight of breaching ethics guidelines. The group claimed that Hinman’s actions may have favored his former firm and promoted Ethereum for personal or professional gain. These allegations led to repeated requests under the Freedom of Information Act and ultimately triggered an internal probe by the SEC’s Office of Inspector General (OIG).

According to a ten-page report released by the SEC’s OIG, the investigation concluded that the allegations lacked merit. It stated that Hinman did not violate any criminal conflict-of-interest laws during his tenure at the SEC. Moreover, the report clarified that Hinman did not personally benefit from the Ethereum speech, and had no cryptocurrency holdings at the time, as confirmed by his financial disclosures. In addition, the report mentioned that Hinman had converted his retirement payments from Simpson Thacher into a fixed annuity before joining the SEC, in line with federal ethics rules. This move helped prevent any ongoing financial ties that could be viewed as conflicts of interest.

The report also aimed to debunk the idea that Hinman was solely responsible for the 2018 Ethereum statement. It emphasized that the speech was not a personal opinion but a collaborative effort reviewed by multiple SEC staff members. This means the views expressed were consistent with broader internal discussions, rather than Hinman’s individual stance. However, this clarification has done little to quell public frustration among those who believe the SEC has shown preferential treatment in how it regulates different digital assets.

Empower Oversight, the whistleblower group behind the allegations, has criticized the investigation, calling it too narrow in scope. Jason Foster, the group’s founder, argued that the report failed to fully address the more serious issue of regulatory inconsistency. According to Foster, the SEC did not adequately explore whether Hinman’s past connections influenced his role, nor did the report provide clarity on why Ethereum received informal clearance as a non-security, while XRP was subjected to a lawsuit that continues to this day.

This perceived imbalance in regulatory treatment has remained a sore point for XRP supporters. Many in the XRP community argue that Ripple has been unfairly targeted, especially when compared to Ethereum’s trajectory. The ongoing SEC lawsuit against Ripple, introduced in December 2020, alleges that XRP was sold as an unregistered security, a claim that has been partially challenged in court. A 2023 ruling stated that XRP was not a security in many instances, giving Ripple and its supporters a partial victory, but the case is still unresolved.

As the crypto market continues to evolve and attract institutional attention, the demand for consistent regulatory clarity is only growing. The Hinman report may have cleared the former SEC official of ethical violations, but the broader conversation about transparency, fair enforcement, and crypto policy remains far from settled. While this investigation may close one chapter in the long-running Ethereum-XRP debate, it reinforces the urgent need for a clear and level playing field as regulators and innovators navigate the future of digital finance.