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The dispute between Cardano founder Charles Hoskinson and Ripple CTO David Schwartz over the controversial “$ETH Gate” has heated up, with Schwartz recently shading Hoskinson.
In a recent tweet, Schwartz expressed frustration over Hoskinson’s “ridiculous reply” to concerns about the SEC’s inconsistent treatment between Ethereum ($ETH) and $XRP ($XRP).
According to Schwartz, Hoskinson has repeatedly dismissed the idea that the SEC’s favorable regulatory stance on Ethereum impacted the agency’s stringent regulatory stance against $XRP.
You got the answer to this for at least the second time and your ridiculous reply was that drawing the line with $ETH on the "good side" has nothing to do with drawing the line with $XRP on the "bad side".
— David "JoelKatz" Schwartz (@JoelKatz) April 29, 2024
Inconsistent Treatment Between $ETH and $XRP
Recall that the SEC, via its former director of Corporation Finance, William Hinman, declared Ethereum a non-security in June 2018. However, the regulatory agency labeled $XRP a security in a December 2020 lawsuit against Ripple.
The SEC’s inconsistent regulatory treatment of Ethereum and $XRP birthed the “$ETH Gate” theory.
On the one hand, some critics argue that the theory relates to Ethereum executives establishing relationships with internal SEC officials to create a favorable regulatory environment for $ETH. However, others speculate that Ethereum also asked the SEC to attack $XRP and Ripple along the way.
Cardano Founder and Ripple CTO At Loggerheads
Hoskinson, one of Ethereum’s eight founding members, characterized the first $ETH Gate theory as favoritism rather than corruption. Additionally, he pointed out that no evidence supports allegations that the SEC was bribed to attack Ripple and $XRP.
His recent comments on the matter elicited reactions within the $XRP community, with Schwartz referencing Hinman’s affiliation with Ethereum as potential evidence.
This includes Hinman’s consistent meetings with his former employer, Simpson Thacher & Bartlett, an Ethereum-related law firm, while he was still a director at the SEC.
It is worth mentioning that Simpson Thacher paid Hinman over $9 million in profit sharing while still at the SEC. These events stoked the flames of the controversies surrounding $ETH Gate.
Nevertheless, Hoskinson still does not think these developments prove anything, as he continues to ask for evidence showing that the SEC was bribed to go after $XRP.
In response, Schwartz stated that Hoskinson has already gotten the answer he seeks but maintains that the SEC’s fair treatment of $ETH has nothing to do with its harsh actions against $XRP.
Consensys Sues SEC
While the Ripple lawsuit regarding $XRP status is nearing its conclusion at the district court level, Ethereum recently sued the SEC to stop it from potentially classifying $ETH as a security.
This came after the SEC issued its fourth subpoena to Consensys, which indicates that the regulator is actively investigating whether certain Ethereum transactions constitute investment contracts.
Besides issuing a subpoena to Consensys, the SEC served a similar warrant to other entities that have facilitated $ETH-related transactions. Consequently, Consensys sued the SEC to prevent the potential classification of $ETH as a security.