Prominent crypto expert Digital Asset Investor (@digitalassetbuy) recently drew attention to a long-standing debate in the cryptocurrency community regarding the SEC’s handling of Ethereum.
In a post on X, he questioned why the SEC has not taken action against Ethereum founders or labeled its initial coin offering (ICO) an illegal securities offering.
His post drew attention to Ethereum’s 2015 ICO, and he shared a video where co-founder Vitalik Buterin admitted that the foundation funded development by selling ETH. This discrepancy, especially in comparison to the SEC’s aggressive stance against Ripple and XRP, has fueled what many have called the ETHGate controversy.
The SEC’s Inconsistency
At the core of Digital Asset Investor’s argument is the question of fairness in regulatory enforcement. Ethereum ICO, much like Ripple’s XRP sales, involved the exchange of tokens for funding, which according to the regulator, qualifies as an unregistered securities sale under U.S. law.
Yet, while Ripple has been embroiled in a high-profile legal battle with the SEC, Ethereum has seemingly avoided similar scrutiny. After the legal battle with Ripple ended and the SEC lost, it filed a notice of appeal, renewing tensions in the market, while leaving Ethereum and its founders untouched. This disparity has led many, including Digital Asset Investor, to question why the SEC has treated Ethereum differently.
Further fueling suspicions is Ethereum’s connection to the Chinese conglomerate Wanxiang Group, which allegedly purchased 416,000 ETH in December 2015. Digital Asset Investor suggests this transaction might have been an illegal securities sale, raising questions about the SEC’s lack of enforcement action.
We are on twitter, follow us to connect with us :- @TimesTabloid1
— TimesTabloid (@TimesTabloid1) July 15, 2023
Potential Reasons for the SEC’s Selective Enforcement
One possible reason for Ethereum’s exemption from regulatory action could be a 2018 speech by former SEC Director of Corporate Finance William Hinman, in which he declared that Ethereum had reached a point of sufficient decentralization.
Hinman’s remarks suggested that Ethereum, in its current form, was no longer considered a security. However, critics argue that this does not explain why Ethereum’s ICO, which predates this ruling, was never subjected to the same scrutiny as other projects like Ripple.
Proponents of the ETHGate theory below that Ethereum received preferential treatment from the SEC, creating a double standard in the enforcement of U.S. securities laws.
Some have gone as far as alleging that Ethereum founders bribed Hinman. Digital Asset Investor’s post highlights the growing frustration in the XRP community because of the SEC’s inconsistency, with companies like Ripple affected the most.
However, many prominent voices have pushed back against ETHGate, with Cardano creator Charles Hoskinson arguing that although Hinman showed favoritism toward Ethereum, there was no corruption.
Disclaimer: This content is meant to inform and should not be considered financial advice. The views expressed in this article may include the author’s personal opinions and do not represent Times Tabloid’s opinion. Readers are urged to do in-depth research before making any investment decisions. Any action taken by the reader is strictly at their own risk. Times Tabloid is not responsible for any financial losses.
Follow us on Twitter, Facebook, Telegram, and Google News
