Andreessen Horowitz has hired the CEO of cryptocurrency exchange Coinbase, Brian Armstrong, to lead a new crypto-focused venture capital fund. The move is part of an ongoing trend in Silicon Valley, where many top executives are now leaving their companies to work at crypto startups.
The Hinman’s Revolving Door Now Swings to Andreessen Horowitz is a headline that has been circulating around the internet. It is about Peter Hinman, who was the CEO of Facebook from 2001-2008, leaving his position at Microsoft to join Andreessen Horowitz.
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William Hinman, the former Director of Corporation Finance at the Securities and Exchange Commission, continues his trip around the golden revolving door. The partner at the Ethereum-connected legal firm Simpson Thacher who helped take Alibaba public in 2014 stepped into the SEC to provide public regulatory clarification to just one cryptocurrency – ETH – before exiting the SEC and returning to Simpson Thacher. He wasn’t done yet, however.
Andreessen Horowitz, a digital venture capital company, revealed today that Hinman has joined the firm as an advising partner in their $2.2 billion “a16z crypto” fund. Hinman “will offer important insights to us and our portfolio businesses, as well as play a vital role in defining the future regulatory framework in which we and they operate,” according to the company.
Hinman’s new crypto fund is one of the biggest in history, almost four times the size of Andreessen’s prior crypto fund. It’s understandable why Andreessen would urge him to “influence the future of the regulatory environment” in order to make their investments profitable. Consider what he did to drive the price of ETH up while he was a public official getting $15 million in compensation from Simpson Thacher while in government. From approximately $477 the day before he made his “ETH is not a security” statement as an SEC official in June 2018, to over $4000 last month. Simpson Thacher also profited from Hinman’s 2018 speech when it sold Canaan, a Chinese crypto mining equipment manufacturer, in a $100 million IPO in late 2019. The IPO definitely made Simpson Thacher wealthier – and Hinman, due to the millions they were paying him – and the regulatory certainty for a mined cryptocurrency like ETH after Hinman’s speech surely helped raise Canaan’s value.
Although Hinman is no longer with the SEC, the experience of riding through the most daring revolving door in recent memory must have some value for his new company. However, the people at Andreessen Horowitz may think twice about their new advising partner’s thickening cloud, especially if the Ripple case’s discovery phase progresses and depositions are required. Regardless of the result of the lawsuit, the concerns about Hinman’s financial conflicts of interest while at the SEC will follow him around until they are resolved.
Those issues will stay unanswered if the SEC has its way, since the SEC has been trying to keep Hinman from being deposed. This raises a new question: is this a battle worth public money? Why should taxpayers have to carry the burden in keeping the truth from being revealed if Simpson Thacher can locate a competent attorney or two?
In a recent move, Andreessen Horowitz has acquired the Hinman’s Revolving Door Now Swings to Andreessen Horowitz for $15 million dollars. The company was founded by former Yahoo CEO Jerry Yang and is now led by David Hinman. Reference: sufficient decentralization.
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