Ripple CTO David Schwartz recently slammed Cardano founder Charles Hoskinson over the United States Securities and Exchange Commission’s alleged preferential treatment of ether over other cryptocurrencies. This contention stems from the conspiracy theory “ETHgate.”
ETHgate suggests that ether received preferential treatment from U.S. regulators, especially the SEC, for having avoided being classified as a security. This contrasts with other assets like XRP that remain mired in regulatory uncertainty.
In a recent AMA, Hoskinson argued the released SEC documents show no corruption but rather regulatory favoritism towards Ethereum. He claims there is no evidence of wrongdoing. Hoskinson was talking about the Hinman documents, which were made publicly available on June 12. The documents are considered to be key to Ripple’s defense in its ongoing battle with the SEC.
However, the Ripple CTO contested this perspective. He countered that government favoritism aligned with personal interests constitutes corruption.
I would argue that a government actor showing favoritism aligned with the personal interests of themselves and their friends is corruption.
— David “JoelKatz” Schwartz (@JoelKatz) October 12, 2023
The XRP community also challenged Hoskinson’s remarks, considering his early role as an Ethereum co-founder. Some suggest this raises questions about his incentives to downplay ETHgate claims.
Hoskinson departed Ethereum in 2014 after disputes with other co-founders, later founding the rival network Cardano. His controversial ETHgate opinions have provoked accusations of bias from XRP supporters.
The heated exchange underscores ongoing confusion around asset definitions in crypto. While Hoskinson denies improper conduct, Ripple representatives allege favors granted to Ethereum at XRP’s expense reveal compromised processes.
Significantly, the theory has arisen due to the SEC’s extended evaluation of ether as not being a security, even as other widely held assets, such as XRP, are categorized as unregistered securities. According to proponents of the ETHGate theory, which include XRP attorney John E. Deaton, there have been claims of undisclosed interactions between Ethereum and the SEC that led regulators to exempt Ether from federal securities regulations.
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