ETHGate Wasn’t Corruption, Just Favouritism

In a revealing AMA session, Cardano founder, Charles Hoskinson, weighed in on the much-debated drafts of William Hinman’s controversial speech on Ethereum. Addressing the burning issue, he stated, “It’s certainly a value getting these Hinman emails and these other things because they can perhaps expose the thought process the SEC has and you can definitely show that there was unequal application of law. That’s fine. But none of that activity presupposes corruption, just favoritism.”

Controversy Surrounding Hinman Docs

Ripple Labs thrust Hinman’s documents into the limelight this June after enduring a prolonged legal feud with the US Securities and Exchange Commission (SEC). The papers provided a meticulous account of the events that prefaced Hinman’s declaration that Bitcoin and Ethereum were not to be treated as securities. A point of contention arose from the discovery that Hinman had met with Ethereum co-founder, Vitalik Buterin, merely a week prior to the said speech.

This sparked rampant speculation regarding the possibility of Ethereum’s team having influenced Hinman’s stance in their favor. The roots of this suspicion stem from William Hinman’s association with the law firm, Simpson Thacher, a recognized member of the Enterprise Ethereum Alliance. Though Hinman exited the firm upon his appointment as the Director of the Division of Corporation Finance at the SEC in May 2017, records show he continued to garner considerable financial benefits from the firm.

The optics of these financial ties are somewhat marred by Hinman’s integral role at the SEC, especially given the agency’s regulatory purview over cryptocurrencies. A previous SEC ethics lawyer branded the situation as “a little unsettling.” By January 2021, reports surfaced that Hinman was en route back to Simpson Thacher, which continues its association with the Enterprise Ethereum Alliance. Financial disclosures reveal Hinman’s earnings from Simpson Thacher amounted to a whopping $15 million during his four-year tenure at the SEC.

However, Hoskinson stands firm in his belief that these series of events, though potentially indicative of favoritism, do not confirm corrupt practices. His insights come in response to probing queries about ETH Gate – a conjecture positing that Ethereum figureheads may have leveraged ties with the SEC’s upper echelons to achieve regulatory leniency for Ethereum.

Diving deeper into the “ETH Gate” saga, Hoskinson clarified that the crypto community seems to be entangling two distinct narratives. One angle suggests Ethereum’s officials could have employed their networks or finances to encourage a softer regulatory touch on Ethereum from the SEC. Contrarily, a segment of XRP supporters postulates that Ethereum could have potentially orchestrated a move against XRP and Ripple.

Drawing a line between the two, Hoskinson commented, “These are very different things. It is one thing to use relationships to protect your own thing. It is another thing to use relationships in a conspiracy to attack a competitor.”

Cardano Founder: No Evidence Ethereum Bribed SEC

Hoskinson remains skeptical about claims asserting Ethereum’s intent to undermine XRP via SEC machinations. As he forthrightly expressed, “You have yet to give any evidence whatsoever that a single meeting has happened where someone from Ethereum bribed or gave money or convinced a member of the SEC to go after XRP.” It’s worth noting that Hoskinson is also a former co-founder of Ethereum.

While XRP supporters had previously taken Hoskinson to task for labeling their accusations as merely conspiratorial, his latest observations on the matter have rekindled their ire, leading to fervent discussions on X (formerly Twitter).

At press time, Cardano (ADA) traded at $0.2479, down 1.7% in the last 24 hours.

Featured image from Cardano Forum, chart from TradingView.com