Cardano founder criticizes SEC for favoring Bitcoin over other cryptocurrencies

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Cardano founder Charles Hoskinson has criticized the U.S. Securities and Exchange Commission (SEC) for its leniency toward Bitcoin.

During a livestream, he accused the SEC of granting Bitcoin a “complete pass” regarding its decentralized nature, allowing it to avoid being labeled as a security. Hoskinson questioned Bitcoin’s decentralization, suggesting it may not be as decentralized as it should be.

“If you subpoena and attack about three different entities, you could perform a 51% attack on Bitcoin because that’s the way the hash power works,” Hoskinson said. “But it’s decentralized, apparently. And Team Orange gets a complete pass.”

Calling the SEC’s handling of Bitcoin an “absolutely pathetic joke,” Hoskinson questioned the difference between Bitcoin, Ethereum and Cardano.

“Explain it to me. Like I’m five years old. Right now. Run the goddamn Howey test on it and show me the difference between the two. Tell me,” said Hoskinson.

Hoskinson also highlighted Bitcoin’s profit anticipation among its enthusiasts, dubbing them “orange pill moon boys.”

“Is there an expectation of return with the goddamn orange pill moon boys? It’s there. There are so many different planks and angles that you can take a look from,” Hoskinson said.

Hoskinson emphasized that the anticipation of profit is a crucial element in the Howey test, often used to classify assets as securities.

Accusing the SEC of wasting millions in a pointless legal battle, the Cardano founder predicted repeated losses in court cases. He suggested that, eventually, the conflicts would cease without any apologies or refunds.

While he criticized “unaccountable” government and regulators, Hoskinson praised libertarian lawmakers, saying that those who seek to reduce government influence are the ones making a positive impact on the situation.

“The entire reason cryptocurrencies exist is that we’re trying collectively to re-establish the social contract because the social contract is horrifically broken,” he said.

Bitcoin’s organic growth reflects decentralized status

Responding to Hoskinson’s claims, Blockstream CEO Adam Back insisted on Bitcoin’s decentralized status, emphasizing its organic growth from zero value and the absence of an initial coin offering (ICO). He labeled Bitcoin as a commodity, setting it apart from cryptocurrencies like Ethereum and Cardano, which he considered securities.

“Bitcoin did not do an ICO, most people thought it had no value, it was mined from zero, it is decentralized, there is no CEO,” said Back.

In response to Back’s view, Hoskinson compared Bitcoin to Cardano, highlighting the absence of an ICO and explaining the airdrop and voucher sale structure.

“There was no Cardano ICO. There was an airdrop onto a distribution. A voucher sale of a different asset outside of the United States, priced in Yen, settled in Bitcoin, explained in Japanese to Japanese citizens, and without a single U.S. participant does not constitute an ICO of Ada,” Hoskinson said.

Back countered Hoskinson’s claims, saying that the presence of an airdrop, premine and market making in Cardano’s situation might still be seen as an ICO. He also highlighted the dependence on a management team as a factor contributing to the anticipation of profit, which is a crucial aspect of the Howey Test in defining a security.