Cardano founder Charles Hoskinson took up the topic of the highly-contested ETHgate theory in an Ask-Me-Anything (AMA) session on 8 October. He laid out the possible reasons that motivated the US Securities and Exchange Commission (SEC) to not call Ether ($ETH) a security.
The ETHgate conspiracy theory claims altcoin king Ethereum of receiving a free pass from US regulators when it comes to $ETH not being tagged as a security for years. This gained much traction in the background of regulatory watchdogs like SEC which has been hounding a number of other crypto assets for being an unregistered security.
In 2018, the then SEC director William Hinman defined Ether as not a security. Despite this, US regulators have not yet clearly established the status of other coins, including $XRP, which has been struggling to achieve regulatory clarity in Ripple’s ongoing case with the SEC.
However, Hoskinson doesn’t think corruption to be the reason behind the same. According to him, Hinman’s speech drafts on the regulatory status of Ethereum, which was unsealed in June 2023, do not prove corruption but favouritism.
The Cardano founder argued in the AMA: “None of that activity presupposes corruption, just favoritism…. this is how the internet works, and it can’t be fixed now.”
He also believes that there is a lack of evidence, like from emails or meetings, to prove otherwise. $XRP serves different customers, doesn’t even have smart contracts and has an entirely different business model, Hoskinson added. Emphasising the favouritism part by the SEC, he said: “Doesn’t that dilute your entire goal of making Ethereum not a security to also do that? Are you so scared of $XRP that’s going to happen? You really believe that? If you do, you’re a crazy person in my book.”
The founder then went on to say that somebody in the Ethereum circuits could have bribed or given money to convince a member of the SEC to go after $XRP. However, these remarks were quickly taken up by the $XRP community. It also triggered a response from top executives like Ripple chief technology officer, David Schwartz.
In a post made on X (formerly Twitter) on 12 October, he wrote: “I would argue that a government actor showing favouritism aligned with the personal interests of themselves and their friends is corruption.”
Other commentators on this connected Hoskinson’s comments to the time he was the co-founder of the Ethereum blockchain platform. They alleged that his questions about ETHgate evidence might be linked to the fact that he allegedly has a lot to hide about his early days in Ethereum.
While being one of the eight co-founders of Ethereum alongside Vitalik Buterin, Hoskinson also briefly held the position of the blockchain’s CEO between 2013 and 2014. However, this was followed by a public fall-out between the co-founders, after which Hoskinson left Ethereum in 2014. He then went on to develop Cardano, which is a third-generation cryptocurrency that launched in September 2017.
In the SEC’s lawsuit against crypto exchange Binance, the regulator had named Cardano ($ADA) as a security, along with others like Solana ($SOL) Binance’s $BNB token.
He had responded to this saying “we are going to be fine” as he added: “Honestly, what is happening isn’t anything new. It’s always the same fight between freedom and authoritarianism just with different players, technology, and words. It does seem like this event is a perfect opportunity for the entire industry to set aside its fragmented nature and unite for a common sense set of rules and guidelines that can prevent the United States from slipping into a dystopia that would make 1984 look like a vacation….I’ll have more to say later, but will close with we are going to be fine. Everything’s alright and the future is bright for the industry.”
