A war of words has erupted between crypto leaders over the SEC’s controversial stance that Ethereum is not a security.
Ripple CTO David Schwartz recently slammed Cardano founder Charles Hoskinson for defending the SEC’s apparent favoritism.
The dispute stems from resurfaced SEC documents suggesting director William Hinman provided special treatment to Ethereum in 2018 by deeming it not a security.
This sparked “ETHgate” accusations as the SEC pursued cases against Ripple and other altcoins.
In an AMA last week, Hoskinson argued there’s no proof of corruption, just potential favoritism. He asked for evidence of meetings or emails showing misconduct between officials and Ethereum.
But Schwartz fired back, equating favoritism benefiting friends with corruption. He found Hoskinson’s logic unpersuasive in explaining the uneven regulatory actions.
“A government actor showing favoritism aligned with personal interests is corruption,” Schwartz tweeted.
The Ripple CTO enjoyed support from XRP investors, alleging Ethereum received preferential treatment.
Hoskinson helped found Ethereum and briefly served as CEO in 2014 before leaving to start Cardano. Some conspiracy theories suggest he wants to bury SEC issues to protect Ethereum.
However, Hoskinson contends different business models justify the SEC’s divergent stance. He said Ripple serves banks while Ethereum offers smart contracts, so there is less risk of being a security.
The heated dialogue illuminates tensions in crypto over perceived SEC overreach. Regulators cherry-pick easier targets like XRP while ignoring similarities with Ethereum.
Ripple is battling the SEC in court over XRP sales the agency calls unauthorized securities offerings. The case could provide legal clarity on what constitutes a security in crypto.
Hoskinson maintains the SEC acted reasonably, given the differences between the major altcoins. But Schwartz and fellow critics counter that inconsistency suggests inappropriate discrimination.
With the SEC’s opaque criteria under fire, the industry hopes courts will soon offer concrete guidance. Until then, the divide among crypto leaders over the agency’s actions continues to widen.
The latest social media clash between Schwartz and Hoskinson shows the rifts within crypto regarding engaging with regulators. As lawsuits proceed, more revelations about the SEC’s thinking may emerge.
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