The crypto world is currently abuzz with the alleged ETHgate scandal. Advocates of this conspiracy theory insist that US regulators—including the Securities and Exchange Commission (SEC)—have basically given Ethereum (ETH) a “free pass”. At the heart of this much-debated theory is the SEC’s unwavering stance that Ether is not a security.
Cardano founder says no evidence to suggest SEC gave a “free pass” to ETH
Cardano founder Charles Hoskinson recently gave his two cents on the matter in an AMA session. He asserted that the SEC’s determination of Ether not being a security stems not from corruption but rather favoritism.
Back in 2018, SEC director William Hinman defined Ether as “not a security”. More than four years later, Wall Street’s top cop is still dragging its feet to establish the status of other coins, including Ripple Lab’s XRP token. As a result, XRP is struggling to position itself as a “real” cryptocurrency.
However, Hoskinson says that drafts of Hinman’s speech on the regulatory status of ETH, which was publicly made available in 2023, do not indicate that the US capital markets regulator indulged in corruption. He argues that “None of that activity presupposes corruption, just favoritism,” and that “this is how the internet works, and it can’t be fixed now.”
The Cardano founder stresses that there is no evidence to prove corruption within the SEC. “What evidence do you have of that? Where are the emails? Where are the meetings?” Hoskinson questioned in the AMA session. In addition, he said that XRP caters to a different league of customers, lacks smart contracts, and is based on an entirely different business model.
Ripple executive condemns Hoskinson’s remarks
However, Hoskinson’s recent comments on the ETHgate theory have prompted backlash from the XRP community, especially Ripple Labs chief technological officer David Schwartz. In an October 12 post on X (formerly Twitter), Schwartz says, “I would argue that a government actor showing favoritism aligned with the personal interests of themselves and their friends is corruption.”
XRP community questions Hoskinson’s old ties to ETH
Hoskinson is also facing criticism from some community members who speculate that his dismissal of ETHgate theory might be tied to his early days in Ethereum. Not only is Hoskinson the founder of Cordana, but he also co-founded Ethereum, along with Vitamin Buterik and seven others. Hoskinson also served as Ethereum’s CEO between 2013 and 2014.
As the crypto community continues to debate the ETHgate scandal, the verbal spat between Schwartz and Hoskinson raises questions about regulatory practices and transparency within the digital currency landscape. It also underscores the need for clear, unbiased, and consistent regulatory frameworks in the burgeoning crypto industry.
It’s worth noting that while the SEC defines Ether as “not a security”, it views most crypto tokens as securities. The SEC’s cryptocurrency confusion has proved costly for several crypto companies, such as Binance, and Coinbase, which have been served with lawsuits from the agency. The SEC alleges both Binance and Coinbase were selling unregistered securities and misleading investors.
