- Charles Hoskinson rubbished the idea of a conspiracy against Ripple.
- Ethereum “got lucky” with the SEC as an early mover.
- SEC bias remains a topic of discussion.
The US Securities Exchange Commission’s (SEC) tough stance against the cryptocurrency industry has dominated headlines lately. However, the SEC suffered a huge blow in July when the judge overseeing the SEC vs. Ripple lawsuit ruled that the sale of XRP tokens did not constitute a securities offering.
During the bitter legal battle, Ripple’s defense team uncovered inconsistencies in the SEC’s approach to crypto regulation, particularly regarding the seemingly special treatment toward Ethereum, which the agency had deemed not a security. This favoritism sparked theories that Ethereum had bribed the SEC to go after Ripple.
Having his say on the matter, Input Output CEO Charles Hoskinson rejected any notion that Ethereum has a vendetta against Ripple, saying that “makes no sense to me at all.”
Hoskinson Dismisses Conspiracy Talk
Explaining his thoughts on a supposed Ethereum-led conspiracy against Ripple, Hoskinson reminded crypto Twitter that the 2014 ETH Initial Coin Offering (ICO) was for a relatively insignificant amount of money and something of a novelty at the time. That being the case, Hoskinson posited that Ethereum was more fortunate to escape the clutches of SEC scrutiny than being a protected insider with regulatory privileges.
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“I've always believed that when Ethereum was an 18 million dollar ICO and very few people were doing them that the SEC decided to ignore it and crypto and they got lucky to be too old to consider after the eye of sauron moved over,” explained Hoskinson.
The IOG Co-Founder conceded that “personal relationships and backroom stuff” likely play a role in the SEC-Ethereum relationship, as is the case in many companies and industries, but stopped short of endorsing the theory that Ethereum had bribed the SEC to take down a rival blockchain in Ripple.
Putting the matter to bed, Hoskinson mentioned that “Ripple wasn’t even in the smart contract space” when the SEC brought legal action against the company. Nonetheless, the agency’s relationship with Ethereum was probed during the SEC vs. Ripple trial, when accusations of preferential treatment and even suspicions of corruption were uncovered.
SEC Favoritism
The crypto industry understood that Ethereum and Bitcoin had been granted the status of non-securities on the basis of a speech given by former SEC director William Hinman in 2018. Hinman stated that Ethereum is sufficiently decentralized that its prior ICO does not constitute an investment contract per the Howey test.
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“Based on my understanding of the present state of Ether, the Ethereum network, and its decentralized structure, current offers and sales of Ether are not securities transactions,” remarked Hinman.
A key defense strategy during the trial was determining why XRP was singled out while the securities agency greenlighted ETH and BTC. On those grounds, Hinman’s speech was challenged in court, leading to the former director backtracking by saying the speech constituted his personal opinion rather than SEC policy.
The U-turn was accompanied by the discovery that Hinman had links to the Ethereum Foundation through former employer Simpson Thacher, which provides legal services for the foundation.
On the Flipside
- Ethereum-based chains, including Polygon and Pulsechain, have been targeted by the SEC, suggesting the agency is not biased.
- Securities laws should be applied consistently regardless of Ethereum’s ICO being conducted at a time when crypto was little understood.
Why This Matters
The crypto community has grown increasingly frustrated with the SEC’s regulatory approach to the industry. Although theories of backroom deals and bias are unproven, the SEC’s continued hardline approach leaves the agency open to speculative theories on what goes on behind the scenes.
Discover what Monica Long had to say about Ripple’s legal battle with the SEC here:
Ripple’s President Monica Long Speaks Out on SEC Legal Battle
Find out why critics panned Binance’s support of Moroccan earthquake victims here:
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