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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.